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Tag: James Merrill

Did TelexFree Affiliates Fund Millions Of Dollars In Loans To Various TelexFree-Connected Enterprises?

Part of the TelexFree LLC “Balance Sheet” as it appears on the website of the Washington state Utilities and Transportation Commission.

A document published on the website of the Washington State Utilities and Transportation Commission claims that TelexFree LLC has provided millions of dollars in loans to other TelexFree enterprises, including a Nevada entity known as TelexElectric LLLP.

The loan sum was more than $2.022 million, according to the document. The business purpose of TelexElectric was not immediately clear. Also unclear is why the document was published on Washington state’s government website and whether members of the TelexFree MLM “program” knew they were funding intracompany loans.

TelexElectric was formed in Nevada on Dec. 2, 2013, according to Nevada records. TelexFree LLC also is a Nevada business. Both firms list TelexFree Inc. executives James Merrill and Carlos Wanzeler as partners or managers. TelexFree Inc., headed by Merrill and Wanzeler, is based in Massachusetts. Brazilian TelexFree executive Carlos Costa, who is or was associated with TelexFree LLC, is listed in Nevada as a “historical” TelexElectric general partner.

From Google search results.

The Washington state document is dubbed “Telexfree LLC Balance Sheet As of December 31, 2013.” The document claims that, in addition to the $2 million-plus loan to TelexElectric, a loan of more than $3.8 million was provided to an entity known as Telexfree Financial Inc.

Telexfree Financial appears to be a Florida entity under the control of Merrill and Wanzeler. The firm, which was formed on Dec. 26, 2013, lists an address in Coconut Creek, Broward County, according to Florida records.

Meanwhile, the Washington state document lists a loan of more than $500,000 to an entity known as TelexMobile. Where TelexMobile is based could not immediately be determined.

In addition to the loans to TelexElectric, Telexfree Financial Inc. and TelexMobile, there is a loan listed of more than $291,800 to an entity described as Ympactus. A TelexFree-related entity known as Ympactus Comercial Ltd. is based in Brazil.

Listed as an additional asset by TelexFree LLC is a “Propay Reserve” account said to contain more than $4.4 million.

According to the Washington state document, TelexFree LLC has or had accounts at ProPay, TD Bank (three accounts), Citizens Bank, Fidelity Bank, Fidelity Bank Sweep and Middlesex Savings. Most of the accounts were said to have modest balances, but the Middlesex Savings account was said to contain more than $5.4 million.

An entity described as “e-Wallet” was said to have a much larger balance: more than $31.6 million.

TelexFree LLC, according to the document, listed “other assets” totaling more than $27.4 million. These included more than $18 million at Fidelity Investment, nearly $7.3 million at Waddell and Reed, an asset-management firm, and $2 million in a savings account at Middlesex Savings.

The document appears to be dated Feb. 20, 2014.

TelexFree also is using the name “TelexFree International.” Where that entity is based is unclear.

TelexFree is the subject of a securities investigation in Massachusetts. Investigators in Brazil have called TelexFree a pyramid scheme.

Some promoters have claimed that the TelexFree “program” triples or quadruples money in a year. There also have been claims that TelexFree was building 500 hotels in Brazil in the run-up to this year’s World Cup and the 2016 Summer Olympics.

The bottom lines of TelexFree Inc. and the other TelexFree-related entities are not addressed in the TelexFree LLC document. TelexFree LLC is said to have more than $76.1 million in “total liabilities and equity.”

Mar 9, 2014
Were Costa, Nehra No-Shows At TelexFree Confab In Spain? Plus — TelexFree In Haiti

TelexFree affiliates have a role in easing suffering in Haiti, Steve Labriola suggested in Spain. Source: Video on ConventionTelexFree.com.

UPDATED 12:23 P.M. ET (MARCH 4, U.S.A.) A 10-hour video of the TelexFree confab in Spain Saturday and Sunday has emerged, apparently a recording of a once-live feed.

After being billed as headliners, neither Brazil-based TelexFree executive Carlos Costa nor American MLM lawyer Gerald Nehra appeared on the stage to accept awards.

U.S.-based TelexFree marketing executive Steve Labriola walked onto the stage to accept Nehra’s award.

“This is for Jerry,” he said. “I was asked to come up and receive this for Jerry.”

Labriola did not say who asked him to accept the award on Nehra’s behalf.

Nehra does “most of our corporate law,” Labriola said. “He’s a great man. And he also works long hours, like all of you out there, and I [will] be honored to give this to him.”

Whether Nehra was in Spain was not immediately clear. He’d been billed by a website styled ConventionTelexFree.com as a “Special Guest” at the Madrid event.

Labriola then accepted an award for himself.

“Somebody said to me once — ‘Network marketing: it’s a get-rich-quick scheme,’” Labriola recalled in accepting the award. “But let me tell you, if you talk to any of the leaders or anybody that is working their business, there is no get-rich-quick. There is long hours.”

The claim was at odds with various claims online that TelexFree produces “passive” income. Labriola hinted that the firm was attempting to address inappropriate marketing. Whether he’ll clash horns with American MLMer Faith Sloan, with whom he’s been pictured, wasn’t immediately known.

Among Sloan’s claims in 2013 was that TelexFree produced “100% Passive Income.”

TelexFree says it’s in the VOIP business and is expanding into cell phones.

Labriola and other TelexFree “leaders” recently ventured to Haiti, Labriola said, suggesting it could be a warm market for TelexFree, which purportedly is changing people’s lives.

“We drove through some areas that could see . . .” he said, his voice trailing off.

“There’s places in this world that need help,” Labriola continued. “It’s up to all of you to keep working your business. Keep your products and services out there. Make sure that you’re helping people where they need help. And every person that you reach out and touch and help save their life and help move them forward will help your life get a little bit better.”

Haiti is perhaps the poorest country in the Western Hemisphere. Its neighbor — the Dominican Republic — may be emerging as a TelexFree stronghold.

“Don’t worry about the Bloggers online and the things that they’re saying, because we will keep doing the right things in moving forward,” Labriola said.

The PP Blog reported Friday — on the eve of the TelexFree confab in Spain — that the firm was under investigation in the United States. It’s also under investigation in Africa and South America. Brazilian investigators say TelexFree is a pyramid scheme.

Carlos Wanzeler, another TelexFree executive at the Madrid event, appears to have accepted awards on behalf of himself and fellow TelexFree executive Carlos Costa, perhaps the firm’s most well-known executive.

Whether Costa was in Spain was not immediately clear. Like Nehra, he’d been billed as a star attraction.

Among the other TelexFree honorees was Sann Rodrigues, a former defendant in a pyramid-scheme and affinity-fraud case filed by the SEC in 2006. Rodrigues was accused of targeting the Brazilian community in an affinity-fraud scheme that involved telephone cards.

TelexFree President James Merrill also appeared at the confab and received an award.

“Carlos Wanzeler was up here talking about Carlos Costa . . . two of the greatest leaders that I’ve met in my life,” Merrill said. “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.”

Merrill predicted that the excellent lawyering and marketing-consulting TelexFree has received will make TelexFree one of the great MLM companies of all time. Helping drive growth, he said, would be the former president of Excel Communications.

Excel, according to its Wikipedia entry, once used an MLM compensation structure, but suffered when margins on long-distance phone service dropped precipitously. A bankruptcy filing followed.

From the Wikipedia entry (italics added):

Excel sought to be released from its contracts with its independent representatives. This allowed it to continue to receive revenue from its large base of installed customers without paying eternal commissions to the franchisees. Excel continued to operate but ceased to be a multi-level marketing company. Although the change created much cash enabling it to pay creditors, it was seen as shortsighted by the franchisee association because it removed the primary source of sales and customer loyalty.

Mar 3, 2014
SporTV Video Shows That TelexFree, An Alleged Pyramid Scheme, Is Using A Shared Office Facility In Massachusetts With At Least 25 Other Firms
A SporTV reporter enters suite 200. Source: screen shot from SporTV video.

UPDATED 9:21 A.M. ET (FEB. 22, 2014 U.S.A.) As the PP Blog reported on July 4, 2013, TelexFree is using a shared office facility in Marlborough, Mass. Promoters of TelexFree, alleged in Brazil to be a massive pyramid scheme that may be using a VOIP product as a front, have shown photos of TelexFree President James Merrill posing outside the building. Some promoters appear to believe that the building somehow serves as proof that TelexFree is legitimate and has a large-scale, brick-and-mortar presence in the United States.

It is somewhat common for MLM schemes to create the illusion of physical scale as a means of instilling confidence in promoters. Other than the facility and suite it shares with other firms, however, TelexFree appears to have no physical presence in the United States.

Apparently flush with cash despite a freeze on funds in Brazil, TelexFree announced last week that it was sponsoring the Botafogo soccer club in Rio de Janeiro. This prompted Brazil’s SporTV to send a crew to Marlborough and to seek comment from Merrill.

The video report that emerged [Feb. 22 edit: If you can’t see the video, look here] appears to show that TelexFree is a tenant with at least 25 other firms in a single suite: suite 200. An August 2011 report at Examiner.com about office options in Marlborough noted that suite 200 “is home to 103 different companies, 45 of which actually reside at the Regus center on the second floor.”

As shown in the screen shot above from the SporTV video, the camera shows the reporter entering suite 200.

After being greeted by a receptionist in the suite — and it’s unclear if the receptionist worked for TelexFree or the leasing company — the reporter sits down with Merrill.

“I don’t want to get into the financial end of the [Botafogo] sponsorship,” Merrill told the reporter.

Some Brazilians have expressed concerns that TelexFree’s sponsorship of Botafogo could hurt the image of Brazil and soccer in the country, which produced the internationally acclaimed Pelé, one of the most famous athletes in the world and soccer’s most enduring figure. (For many Americans of a certain age, Pelé, who briefly played for the New York Cosmos in the 1970s after playing for the Brazilian national team and the celebrated Santos club, represented their first contact with a sport that is hugely popular internationally but less so in the United States, where baseball, American football, basketball and hockey dominate the airwaves. Decades after his stint with the Cosmos, however, Pelé still is spoken about warmly in the United States.)

TelexFree, which has “Inc.” (Massachusetts) and “LLC” (Nevada) versions of its name, appears also to be using the name TelexFree International, including at the Marlborough office facility. Where the “International” version of TelexFree is officially based is unclear. A Nevada entity known as WorldTelexFree LLC is listed as in “default,” according to Nevada records.

A Facebook site dubbed “TelexFree International” forms part of its URL with the slug of “getpaidweeklyguaranteed.”

In other TelexFree news, a Facebook site styled “TelexFreeInUSA” appears not to have been updated since Jan. 10. The site, which is linked to TelexFree promoter and cash-gifting enthusiast Scott Miller, had been updated almost daily prior to the 10th.

At the time of this PP Blog post, the last headline on the TelexFreeInUSA site read, “OVER THIRTY THOUSAND! Positions Under Me! 100% Of Them Being Paid Weekly! STOP Marketing Programs Where Only 1% Ever . . .”

The site appears not to include an explanation for the sudden lack of postings.

Some promos for TelexFree, including promos from Miller’s group, have claimed that $15,125 sent to the firm returns $57,200 ($42,075 plus the return of the full initial outlay) in a year and that lesser sums return lesser amounts. TelexFree promoters claim they get paid for posting ads online about the company. In 2012, Zeek Rewards, a U.S. company with a similar ad-posting requirement, was accused by the SEC of operating a “classic” Ponzi scheme that gathered hundreds of millions of dollars and paid members with incoming funds from other members.

Among other things, Zeek promoters appeared to believe that an office the company controlled in North Carolina somehow demonstrated that Zeek was not a scam. Not only was Zeek a scam, but it may be the largest Ponzi scheme in U.S. history based on the number of victims created, an estimated 800,000. The SEC accused Zeek of securities fraud and selling unregistered securities.

Based on Google search results in July 2013, TelexFree promoters seemed to be confused about the physical presence of TelexFree and how old the company is. These phrases appeared in the July search results:
- “TelexFree is real brick and mortar 9 year old business, a solid program where . . .”
- “TelexFREE itself with its cutting edge products have been around for over 10 years . . .”
- “Telexfree is an 11 year old company . . .”
- “This 13 year old Advertise & Technology company called TelexFREE, will pay you . . .”
- “Telex Free is a multi level marketing company that was established in Brazil in 2002 . . .”
TelexFree appears to have been formed from the shell of an entity known as Common Cents Communications Inc. in February 2012.
Jan 15, 2014
With Carlos Costa Gesticulating Wildly, TelexFree, An Alleged Pyramid Scheme, Says It’s Now A Soccer Benefactor

TelexFree executive James Merrill shows off his Botafogo jersey. (Source: YouTube promo.)

What do you do when a Brazilian court freezes money and blocks new registrations for your “program” in that country, amid serious pyramid-scheme allegations?

Well, if you’re TelexFree, you file losing appeal after losing appeal. And then, while continuing the pyramid battle, you change your logo so no one can get the idea you ripped it off from the 2010 World Badminton Championship in Paris.

After that, you arrange for cameras to be rolling in the United States to capture the arrival of the limousine at the self-staged event (in Miami?) to announce your sponsorship of the Botafogo soccer club in Rio de Janeiro.

Then, with great fanfare, you videotape the signing of the Botafogo contract — and make sure the cameras capture your top executives at the signing ceremony wearing a Botafogo jersey. (Among the executives are James Merrill and Carlos Wanzeler.)

Finally, you make sure that Carlos Costa — your most well-known executive — gets a chance to be shown evangelizing for TelexFree and gesticulating wildly on YouTube while wearing a Botafogo jersey with the new TelexFree logo affixed.

(If you’re TelexFree, it apparently also helps if you use a split screen to show happy TelexFree affiliates wearing the old logo, a man holding what appears to be a check while the logo of the Best Western hotel chain and the old TelexFree logo appear in the background — and the arrival of a limo, of course.)

Jan 9, 2014
**[UNCONFIRMED]** Report In Brazil Says Prosecutors Have Asked U.S. Court To Block TelexFree Accounts, New Signups **[UNCONFIRMED]**

**[UNCONFIRMED]** A report in Brazilian media translated by Google Translate from Portuguese to English says that prosecutors in Brazil have asked a U.S. court to prevent new members from joining TelexFree and to block the accounts of TelexFree figures Carlos Wanzeler, James Merrill, Carlos Costa and Lyvia Wanzeler.

The PP Blog could not immediately confirm the report. If it is true, it could mean that law-enforcement agencies in Brazil have contacted their U.S. counterparts and asked them to begin the process of investigating a potential seizure of TelexFree-related funds that may be in the United States and perhaps to disable or otherwise block the functionality of the TelexFree web domains. The United States has said on various occasions that it is interested in fostering partnerships with law-enforcement agencies across the globe to combat commercial fraud online.

As of 1:03 p.m. EDT today in the United States, the TelexFree websites remained online and appeared still to be capable of enrolling recruits.

TelexFree has said it has U.S. arms in the states of Massachusetts and Nevada. Some U.S. afffiliates of TelexFree also appear to have formed business entities in California and Florida. Some TelexFree affiliates have claimed the “opportunity” did business through Bank of America, TD Bank and ProPay. (See July 8, 2013, PP Blog report on some of the claims.)

Despite allegations in Brazil that TelexFree was conducting a massive pyramid scheme and that a Brazilian judge and prosecutor had been threatened with death, TelexFree nevertheless held a rah-rah session in California late last month in which an MLM pitchman appears to have tried to sustain the scheme by telling a joke about “Carlos Danger,” an online identity purportedly used by U.S. Democratic politician Anthony Weiner. A companion TelexFree promo playing in the United States on YouTube claims that people who send $15,125 to TelexFree can expect to profit to the tune of more than $42,000 in a year.

TelexFree has a presence on well-known Ponzi-scheme forums such as TalkGold, MoneyMakerGroup and DreamTeamMoney. The forums previously were used as staging grounds for the Legisi Ponzi scheme, the AdSurfDaily Ponzi scheme, the PathwayToProsperity scheme, the Zeek Rewards scheme and the Profitable Sunrise scheme, among others. The SEC has described Zeek as a $600 million Ponzi- and pyramid fraud. The agency has described Profitable Sunrise as a fraud that may have gathered tens of millions of dollars through a series of accounts. Federal prosecutors in Illinois have described PathwayToProsperity as a fraud that made its way into at least 120 countries.

In May, the United States indicted the Liberty Reserve payment processor and forced it offline, amid allegations that Liberty Reserve and some of its operators had engaged in a $6 billion money-laundering conspiracy. In June 2011, U.S. Attorney General Eric Holder described the amount of money being stolen online as “staggering.”

“In recent years, we’ve seen clear, and alarming, advances in the sophistication and commercialization of crimes involving electronic networks,” Holder said. “And the staggering volume of money being stolen online today has the potential to threaten not only the security of our nation — but the integrity of our government, the stability of our economy, and the safety of our people.”

Nearly a year later — in May 2012 — INTERPOL said that “[Eighty] per cent of crime committed online is now connected to organized gangs operating across borders.”

In October 2012, Lisa Monaco, then-Assistant Attorney General for National Security, said that cyber intrusions may have resulted in “the greatest transfer of wealth in history.”

Monaco is now President Obama’s chief counterterrorism adviser.

Some TelexFree members have claimed that the purported “opportunity” has gathered in excess of $300 million. Among other things, TelexFree has purported to be in the hotel-development business in the run-up to the 2014 World Cup and the 2016 Summer Olympics in Brazil. TelexFree, an MLM business, also purports to be in the VOIP telephone business.

Many HYIP “opportunities” that use an MLM sales model have members and promoters in common and promise absurd rates of return. The practice has led to questions about whether groups of MLMers — however loosely associated — may be engaging in willful blindness and causing banks and payment processors to become warehouses for fraud proceeds.

The ASD, Zeek, Legisi, PathwayToProsperity and Profitable Sunrise HYIP schemes may have gathered on the order of $1 billion, court filings suggest. Alleged PathwayToProsperity operator Nicholas Smirnow is listed as wanted by INTERPOL. So is Robert Hodgins, who reportedly once provided payment services to ASD and is listed as an INTERPOL fugitive in a money-laundering case allegedly involving the offloading of narcotics profits in Colombia.

See Aug. 12 TelexFree report on BehindMLM.com.

Aug 12, 2013