BULLETIN: (8th update 9:10 p.m. EDT U.S.A.) In an amended complaint in the SEC’s pyramid- and Ponzi case against TelexFree, the agency says alleged TelexFree fugitive Carlos Wanzeler was using investors’ money to build a “small real estate empire” that consisted of 34 properties in Massachusetts and Florida.
Wanzeler, 45, also allegedly acquired a 40-foot yacht for “$273,878 in cash,” along with two other boats and “a fleet of fancy automobiles.”
“He paid $192,868 for two Ferrari F340 Spiders in March 2013 and $56,610 for a Porsche in February 2013. He also bought three BMW’s and a Toyota Highlander,” the SEC charged.
TelexFree purported to be a VOIP firm branching out into apps, cell phones and credit repair.
On the real-estate front, the SEC charged, Wanzeler went through at least $6.3 million — mostly in cash — to acquire the 34 properties, including $950,000 for the home he shared with his wife in Massachusetts and $450,000 for a home for his son in Florida.
From the SEC’s complaint (italics added)
“He made most of the acquisitions using companies under his control including: (i) JC Real Estate Management Company LLC, a Nevada limited liability company that was formed in July 2012 with Wanzeler and [James] Merrill as managers; (ii) Above & Beyond the Limit, LLC (“Above & Beyond”), a New Mexico limited liability company that [Joe] Craft formed for Wanzeler in September 2012, (iii) CNW Realty State, LLC, a Nevis corporation that was formed in October 2012 with Above & Beyond as manager; (iv) KC Realty State LLC, a Florida limited liability company that Craft formed in October 2012 with Katia Wanzeler as manager; (v) Acceris Realty Estate, LLC, a Massachusetts limited liability company that Craft formed in February 2013 with Katia Wanzeler as manager; and (vi) Makeover Investments LLC, a Florida limited liability company that was formed in July 2013 with Marilza Wanzeler, Wanzeler’s 65-year-old mother, as a manager.”
James Merrill is TelexFree’s alleged co-owner with Carlos Wanzeler. Joe Craft is TelexFree’s former CFO. All three men are accused of fraud at TelexFree and receiving millions of dollars from the company.
Nevis is an island in the Caribbean.
Steve Labriola, another TelexFree executive accused of fraud, received $46,600 through the New Mexico entity in 2013 and only $8,500 from TelexFree, according to a preliminary analysis by the SEC.
TelexFree filed for bankruptcy protection in the United States on April 13, with Wanzeler and Merrill effectively appointing Craft to the TelexFree CFO post, according to court filings. It’s almost certainly the case that TelexFree members at large did not know about the network of other companies associated in one way or another with the Wanzeler family, Merrill and Craft.
In its bankruptcy filing, TelexFree sought to reject its contracts with members. The SEC has described the TelexFree “program” as a massive pyramid- and Ponzi swindle. A U.S. Bankruptcy Judge intends to appoint a trustee in the TelexFree case, the Wall Street Journal reported late this afternoon.
“The information available to date indicates that, between November 2012 and February 2014, Wanzeler and members of his family received almost $13.7 million from TelexFree,” the SEC charged.
Investor funds were used to make the real-estate acquisitions and to purchase the cars, yacht and boats, the SEC charged.
Today’s amended complaint also alleges that TelexFree promoter Santiago De La Rosa used investor cash to support his lifestyle, including “$501,000 in cash for a house in Lynn, Massachusetts” and money spent on a BMW and Mercedes-Benz.
Accused promoter Randy Crosby, meanwhile, “paid $70,000 in cash for a Porsche in September 2013 and $99,000 in cash for another Porsche in December 2013, the SEC charged, citing information available to date.
At the same time, the SEC charged while citing information available to date, accused promoter Faith Sloan “received more than $160,400 from TelexFree investors and $51,000 from TelexFree itself.”
Accused promoter Sanderley Rodrigues (a/k/a Sann Rodrigues) received $317,220 from TelexFree between September 2012 and March 2013 through entities known as WWW Global Business Inc. and VICSS Inc., the SEC charged, again citing information available to date.
The SEC further alleged that Rodrigues had claimed to have made $3 million through TelexFree.
“Rodrigues used investor funds to buy expensive automobiles, including a Lamborghini, a Ferrari, and two Mercedes Benz,” the SEC charged.
NOTE: Our thanks to the ASD Updates Blog.