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Tag: TelexFree

  • BULLETIN: James Merrill of TelexFree Sentenced To 6 Years In Federal Prison

    James Merrill

    BULLETIN: (8TH UPDATE 3:57 P.M. EDT U.S.A.) James Merrill, the former president of the TelexFree Ponzi- and pyramid scheme, has been sentenced to six years in federal prison.

    U.S. District Judge Timothy S. Hillman ordered the sentence, which was four years less than what prosecutors in the office of Acting U.S. Attorney William D. Weinreb of the District of Massachusetts sought.

    Robert Goldstein, Merrill’s lawyer, argued that his client deserved no more than a year.

    The PP Blog is awaiting comment from prosecutors. (See below.) Also see the Boston Globe’s early story on Merrill’s sentence.

    Merrill, 55, of Ashland, Mass., also was sentenced to three years’ supervised release after he completes his sentence and agreed to forfeit about $140 million and other assets, Weinreb’s office said. He was given until May 15 to report to prison. The former TelexFree officer pleaded guilty in October 2016 to eight counts of wire fraud and one count of conspiracy.

    “Despite knowing that Telexfree was a pyramid scheme, Mr. Merrill profited for years at the expense of the hard-working individuals who invested in the fraudulent company,” Weinreb said in a statement. “For the hundreds of thousands of investors, here and around the world, who were taken in by the lies promoted by Mr. Merrill and Telexfree, today’s sentence provides a measure of justice. Mr. Merrill’s greed damaged the livelihoods of thousands of people who were simply struggling to make ends meet.”

    Added Matthew Etre, special agent in charge of Homeland Security Investigations in Boston:

    “While the harm and damage James Merrill caused by stealing more than $3 billion from innocent investors can never be repaired, his victims in more than 240 countries around the world can take some small measure of satisfaction that he is now looking at six years in federal prison and a substantial forfeiture as repayment for his crimes. HSI special agents will continue to aggressively investigate those who seek to profit by taking advantage of others.”

    Separately, police action against TelexFree figures in Brazil continued today, with Brazilian prosecutors formally announcing criminal charges against 22 people accused of operating a clandestine financial institution. (Google translation from Portuguese to English here.)

    Two of the Brazilian defendants — Carlos Costa and Carlos Wanzeler — are known business associates of Merrill. Wanzeler fled the United States for Brazil when investigators were closing in on TelexFree in 2014, U.S. prosecutors said.

    There are at least two major investigations of TelexFree under way in Brazil, including one about money-laundering. It was announced earlier this month.

    More . . .




  • SEC: ViziNova ‘Program’ Was Pyramid Scheme And WCM777 Reload Scam Aimed At Asian-Americans And Hispanic-Americans

    A “program” known as ViziNova was both a cross-border pyramid scheme and a reload scam aimed at victims of the WCM777 online debacle, the SEC says.

    VizaNova, which gathered at least $5 million, invaded the Asian-American and Hispanic-American communities and was partly focused at Brazilians, the SEC said.

    A PP Blog report in June 2014 suggested some ViziNova promoters also were involved in the epic TelexFree scam, which targeted speakers of Portuguese and Spanish. It is common for promoters of MLM-style scams to proceed from scheme to scheme to scheme.

    Charged in the SEC’s ViziNova complaint were alleged operators Renato Rodriguez of Downey, Calif., and Gutemberg Dos Santos of Las Vegas. Both hucksters also promoted WCM777, the agency said.

    “Rodriguez and Dos Santos previously were upper-tier salesmen in World Capital Market (“WCM”), the subject of a 2014 emergency civil injunctive action by the Commission,” the SEC said.

    The complaint also positions ViziNova as a WCM777 reload scheme in which scammed WCM777 participants were scammed a second time by ViziNova. WCM777 was led by Ponzi/pyramid schemer “Phil” Ming Xu.

    From the SEC’s ViziNova  complaint (italics added/light editing performed):

    Rodriguez and Dos Santos made false statements to investors. In March and April 2014, an investor received a phone call from Dos Santos, who told him that Rodriguez and Dos Santos had created Vizinova to make whole those who had invested in WCM. He told him that persons investing $3,200 in Vizinova would receive $32 per day until they had been credited $5,000.

    In September 2014, the investor met with Dos Santos to voice his complaints that Vizinova offered no means to convert points to cash and that the few products available for purchase and resale did not work; Dos Santos reminded him that Vizinova was in a developmental stage and urged patience. That same investor made two trips to Guadalajara, Mexico in the fall of 2014, meeting with Rodriguez and Dos Santos each time in unsuccessful efforts to have his principal returned . . .

    Another investor invested his money and the money of investors whom he recruited for WCM by providing the money to Rodriguez. In early 2014, he met with Rodriguez to demand the return of the amount invested. Rodriguez told him he was going to launch a new, then-unnamed multilevel marketing company in which investors would receive $5,000 for every $3,200 invested, and asked the investor to continue recruiting investors and to develop software for the new venture.

    ViziNova worked in part because Rodriguez and Dos Santos “provided their subordinates with false information that described Vizinova as a legitimate multi-level marketing enterprise, and rewarded those subordinates with commissions for using those falsehoods to solicit new investors,” the SEC charged.

    Setting up a bogus company in Mexico and other business entities to steer pyramid proceeds also was part of the scam, the SEC said.

    “There is no U.S.-based entity called Vizinova,” the SEC charged. “Instead, Rodriguez and Dos Santos used Mexican nationals as nominees to incorporate an entity known as Vizinova S.A. de C.V, in Mexico in April 2014. Although Mexican law precluded them from incorporating the entity, Rodriguez and Dos Santos controlled Vizinova.”

    The securities-fraud haul by Rodriguez included “almost $860,000 to purchase a house, $280,000 in withdrawals or checks to himself” and diversions of $150,000 to other entities he controlled,” the SEC charged.

    Dos Santos, meanwhile, “spent approximately $200,000 in withdrawals or checks to himself, $200,000 on a Lamborghini, and $100,000 on mortgage payments,” the SEC charged.

    In addition, “Rodriguez and Dos Santos also spent more than $1.2 million on credit and debit card bills in connection with running the enterprise,” the SEC charged.

    Rodriguez reportedly once sent a cease-and-desist letter to BehindMLM.com.

    Read the SEC complaint. The defendants agreed to settle for $1.4 million in disgorgement and $160,000 each in penalties, the SEC said. They neither admitted nor denied the allegations, and the settlement must be approved by a federal judge.




  • BULLETIN: New TelexFree Money-Laundering Allegations In Brazil Ensnare Wives, Relatives Of Wanzeler And Costa

    Fifteen TelexFree figures have been linked to a money-laundering scheme in Brazil, according to the Federal Public Ministry of Espírito Santo (MPF/ES).

    Among those linked were TelexFree principals Carlos Wanzeler and Carlos Costa and their wives, MPF/ES said today.

    Katia Wanzeler, Wanzeler’s wife, is believed still to be residing in the United States. U.S. prosecutors consider her husband an international fugitive who fled to Brazil when U.S. investigative heat came on him in 2014.

    The laundering racket led to the purchase of cars and a company in Brazil known as Voxbras, MPF/ES said.

    Here, according to MPF/ES, is the list of those involved in the laundering scheme:

    • Carlos Nataniel Wanzeler
    • Carlos Roberto Costa
    • Katia Helia Wanzeler, wife of Carlos Wanzeler
    • Jozélia Miriam Sangali, wife of Carlos Costa
    • Danny Fabricio Cabral Gomes
    • Febe Wanzeler de Almeida e Souza, sister of Carlos Wanzeler
    • Marisa Machado Wanzeler Salgado, sister of Carlos Wanzeler
    • Roberta Rosa de Jesus
    • Draco Vaz de Oliveira
    • Alex Gomes
    • Diorgeney William of Assisi
    • Lelio Celso Ramires Farias
    • Rhalff Junio de Almeida Coutinho
    • Leide Januaria de Araújo
    • Elizabeth Cerqueira Costa Alves, sister of Carlos Costa

    Their places of residence were not listed.

    Katia Wanzeler was arrested in the United States on a material-witness warrant in 2014. She later was released. She has not been charged criminally in the United States.

    James Merrill, a TelexFree business partner of Carlos Wanzeler, is scheduled to be sentenced March 22 in Massachusetts federal court.

    See the MPF/ES news release (Portuguese): See the English translation by Google Translate.




  • BULLETIN: TelexFree Trustee Moves For Default Judgments Against Dozens Of Alleged Overseas ‘Winners’

    BULLETIN: TelexFree Trustee Stephen B. Darr has moved for assessments of damage and default judgments against dozens of alleged overseas “winners” in the massive Ponzi- and pyramid scheme. The motion before Chief U.S. Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts asks for millions of dollars from about 33 TelexFree promoters with non-U.S. addresses who did not enter defenses after being properly served Darr’s class-action complaint brought in January 2016 and subsequently amended.

    Like the class-action lawsuit and individual actions brought by receiver in the Zeek Rewards’ case, the action by the TelexFree trustee demonstrates that “winners” in corrupt MLM schemes will be pursued to return their gains, plus interest, to the hundreds and hundreds of thousands of “losers” created by such cross-border fraud capers.

    Kenneth D. Bell, the receiver in the Zeek case, now is moving to perfect millions of dollars in judgments.

    Hoffman has set a May 3 hearing in Boston on Darr’s motion.

    Read Darr’s motion.

    One of the alleged overseas winners pursued by Darr received more than $2.92 million, according to a court exhibit. Seven others received at least $1 million. Others still received tens or hundreds of thousands of dollars.

    In other corrupt MLM schemes, new recruits were encouraged to pay their sponsor directly, rather than paying the company directly. This also was the case at TelexFree, a situation that led to money not being forwarded to the firm, contributing to the deepening of the Ponzi.




  • BRIEF: Feds Tweet Photo Of $20 Million Allegedly Found In Box Spring And Tied To TelexFree

    Federal prosecutors have Tweeted a photo of $20 million allegedly found stuffed in a box spring and linked to the massive TelexFree Ponzi- and pyramid caper.

    The cash was found Jan. 4 by the Homeland Security Investigations branch of U.S. Immigration and Customs Enforcement, an arm of the U.S. Department of Homeland Security.

    Agents seized the cash and arrested Cleber Rene Rizerio Rocha, 28, of Brazil. He remains jailed.

    In other HYIP news, apparent supporters of the Traffic Monsoon “program” have been using Twitter in the past 24 hours to ask President Trump to intervene in the SEC’s fraud case brought in July 2016.

    Traffic Monsoon was pitched as an “advertising” program. The SEC alleged the program operated as a Ponzi scheme.




  • BULLETIN: Feds Make Another TelexFree Arrest, Find $20 Million Hidden In Box Spring

    BULLETIN: Federal authorities have arrested a man and have found $20 million allegedly linked to TelexFree in a box spring in an apartment in Westborough, Mass. Agents have seized the cash and charged Cleber Rene Rizerio Rocha, 28, with conspiring to commit money-laundering.

    Rocha may be a Brazilian national with ties to a nephew of TelexFree figure Carlos Wanzeler.

    From a statement by the office of U.S. Attorney Carmen Ortiz (italics added):

    The complaint alleges that an intermediary working on Wanzeler’s behalf contacted an associate for help transferring millions of dollars of TelexFree money – still hidden in the greater Boston area – from the United States to Brazil. The associate, who subsequently became a cooperating witness for the government, allegedly arranged with Wanzeler’s nephew in Brazil to launder the cash through Hong Kong, convert it to Brazilian reals, and transfer it to Brazilian accounts.

    According to court documents, Rocha, acting as a courier for Wanzeler’s nephew, flew from Brazil to JFK Airport in New York City a few days ago. Yesterday, Rocha met the cooperating witness at a restaurant in Hudson, Mass., and allegedly gave him $2.2 million in a suitcase. After the meeting, agents followed Rocha to an apartment complex in Westborough, Mass., and later arrested him. That night, federal agents searched an apartment at the Westborough complex and seized a massive stockpile of cash hidden in a box spring. The cash appears to total approximately $20 million.




  • TelexFree Trustee Hopes Merrill’s Guilty Plea And Sentencing Will Spark More Claims; Darr Asks Judge To Extend Filing Deadline Until March

    newtelexfreelogo-1UPDATED DEC. 22, 2016: The court has extended the claims deadline until March 15, 2017. Earlier story below . . .

    ** _____________**

    With the Dec. 31 filing deadline for TelexFree claims fast approaching, court-appointed Trustee Stephen B. Darr has asked the court to extend the deadline until March 15, 2017.

    Chief Bankruptcy Judge Melvin S. Hoffman has scheduled a hearing Dec. 21 to consider the request.

    Darr advised the judge yesterday that about 121,000 claims had been filed. He added that the guilty plea of TelexFree’s James Merrill, Merrill’s agreement with prosecutors to forfeit tens of millions of dollars and publicity surrounding Merrill’s sentencing set for March 2 and 3 might encourage more participants to file claims.

    Hoffman already has granted one extension — from Sept. 26 until Dec. 31. The scheme, which the judge ruled a combined Ponzi- and pyramid, may have created hundreds and hundreds of thousands of victims worldwide.

    As things stand now, the claims-filing deadline remains Dec. 31 at 4:30 p.m. Prevailing Eastern Time.

    The process of making participants as whole as possible has been “extraordinarily complex,” Darr advised the judge.

    Challenges have included the number of victims, the geographic dispersion of victims throughout the world, the magnitude of losses, language barriers and the complexity of TelexFree itself, Darr advised the judge.

    Criminal prosecutors said in Merrill’s plea agreement that his role in the TelexFree scheme created at least $550 million in losses.

    Codefendant Carlos Wanzeler fled to Brazil, prosecutors said.




  • Bogus Magazine Cover Depicts Alleged Ponzi Schemer Charles Scoville Of Traffic Monsoon As 2016’s Best CEO

    This bogus Forbes' cover says Charles Scoville was 2016's BEST CEO. (Red markings by PP Blog.)
    This bogus Forbes’ cover says Charles Scoville was 2016’s BEST CEO. (Red markings by PP Blog.)

    DISCLOSURE: The PP Blog is a Google publisher.

    A bogus cover of Forbes magazine circulating on Facebook depicts SEC Ponzi defendant Charles Scoville of Traffic Monsoon as the “BEST” CEO of 2016 — all while misspelling his last name.

    The image, which falsely showcases the Forbes’ issue as a “LIMITED EDITION,” appears today on the “TrafficMonsoonupdates” page on Facebook, a cheerleading site for the alleged Ponzi scheme. The post comes at a time that both Facebook and Google have been criticized for not screening out fake news during the recent U.S. presidential election.

    Scoville, of Utah, was not named the best CEO by Forbes either before or after the SEC alleged in July that he was at the helm of a Ponzi scheme that had gathered more than $207 million and had affected at least 162,000 investors across the globe.

    And despite the implication that Forbes had named Traffic Monsoon the “BEST TRAFFIC EXCHANGE IN THE WORLD,” no such thing happened. The SEC’s case against Scoville and his company is still being actively litigated, according to the website of the court-appointed receiver for Traffic Monsoon.

    It is not unusual for promoters of HYIP schemes to claim major publications have lauded them or even that U.S. Presidents supported them. Prior to its 2014 collapse, the TelexFree Ponzi- and pyramid scheme wrapped logos of local TV stations into its promos to imply endorsement. TelexFree may have generated more than $3 billion in illicit transactions.

    In 2008, the $119 million AdSurfDaily Ponzi scheme falsely claimed then-President George W. Bush had given ASD operator Andy Bowdoin a special award for business achievement. An ASD knockoff scam known as AdViewGlobal fraudulently traded on the logos of Forbes and other publishers in 2009.

    A current fraudulent scheme known as OneCoin also has traded on the name of Forbes, according to BehindMLM.com. Earlier, promoters of the WCM777 scam implied the endorsement of the Wall Street Journal.




  • In Immigration Fraud Case, TelexFree Figure Sann Rodrigues Sentenced To Time Served And 2 Years’ Supervised Release

    sannrodrigues1UPDATED 1:56 P.M. ET U.S.A. TelexFree figure Sann Rodrigues could have been sentenced to 10 years for immigration fraud. Instead, he was sentenced yesterday to time served. The office of U.S. Attorney Carmen Ortiz of the District of Massachusetts said early this afternoon that Rodrigues ended up spending 57 days behind bars after his May 2015 arrest on the immigration charge.

    A citizen of Brazil, according to court filings, Rodrigues presented his U.S. “green card to Customs and Border Protection Officers on May 3, 2015, at Logan Airport [in Boston], knowing that he obtained that document based upon false statements to immigration officials,” prosecutors said.

    Rodrigues was not charged criminally for his involvement in TelexFree, perhaps the largest combined Ponzi- and pyramid scheme in history. SEC civil charges brought against him in April 2104 remain intact, as does other TelexFree-related civil litigation.

    A veteran huckster who once claimed “God” invented MLM and “binary,” Rodrigues potentially faces large financial judgments for his TelexFree behavior, which followed earlier behavior in a scheme known as Universo Fone Club prosecuted by the SEC in 2006.

    Rodrigues also promoted a collapsed “program” known as IFreeX.

    U.S. criminal prosecutors said Rodrigues was freed after sentencing in Massachusetts yesterday and will be on supervised release for two years.

    During his period of supervised release, he is “required to comply with any immigration-related orders, the U.S. Attorney’s Office said.

    Because Rodrigues, a Brazilian national, now has been convicted of a felony, he is subject to “administrative immigration proceedings” by the U.S. Department of Homeland Security, the U.S. Attorney’s Office said.

    Such actions potentially could lead to deportation.

    NOTE: Our thanks to the ASD Updates Blog.




  • Merrill’s U.S. Plea Requires Him To Cooperate With Brazilian Federal Police

    James Merrill.
    James Merrill.

    If Brazil’s Federal Police wish to ask him about TelexFree’s involvement in wire fraud and an underlying conspiracy, James Merrill is required to provide a “complete and truthful proffer,” according to the terms of his plea agreement with U.S. prosecutors in Massachusetts.

    Merrill, 55, of Ashland, Mass., also is required to cooperate with U.S. agencies that have questions about the fraud, according to the agreement. The agreement ultimately may pit Merrill against Carlos Wanzeler, a TelexFree co-founder charged with wire fraud and conspiracy in the United States.

    U.S. prosecutors say Wanzeler fled to Brazil after TelexFree’s massive Ponzi- and pyramid scheme was exposed in April 2014. Brazil’s Federal Police continue to investigate TelexFree and an affiliate known as Ympactus in that country. The Brazilian probe also involves TelexFree figure Carlos Costa.

    U.S. prosecutors said yesterday that Brazilian Federal Police had provided “valuable assistance” in the U.S. probe. The office of U.S. Attorney Carmen Ortiz also lauded U.S. agencies and the Massachusetts Securities Division, the state-level regulator.

    Under the plea agreement, Merrill would receive prison time of no more than 10 years. Eight counts of money-laundering would be dismissed.

    “Merrill also agreed to forfeit approximately $140 million, numerous real estate properties, luxury vehicles and boats,” U.S. prosecutors said.

    In the agreement, Merrill said the deal was in his best interests and that “I am guilty of the offenses to which I am pleading guilty.”

    The agreement noted Merrill had rejected plea offers made earlier. Merrill, who potentially could have faced decades in prison, was defended by Robert M. Goldstein.

    Merrill pleaded guilty yesterday to eight counts of wire fraud and one count of conspiracy. U.S. District Judge Timothy S. Hillman scheduled sentencing for Feb. 2.

    Note: Thanks to the ASD Updates Blog.




  • James Merrill, TelexFree’s President, Pleads Guilty

    James Merrill.
    James Merrill.

    3RD UPDATE 2:56 P.M. EDT OCT 25 U.S.A. James Merrill, the president of TelexFree, has pleaded guilty to eight counts of wire fraud and one count of conspiracy in Massachusetts federal court.

    Merrill, 55, of Ashland, Mass., is scheduled to be sentenced in February.

    “The significance of a guilty plea in a case of this magnitude cannot be overstated,” said special agent in charge Matthew Etre of Homeland Security Investigations, Boston. “James Merrill is finally facing justice for his role in bilking more than $3 billion from innocent investors, in more than 240 countries around the world, for what amounted to little more than greed. HSI special agents will continue to aggressively investigate those who seek to profit by taking advantage of others.”

    Records show Merrill formalized a plea agreement Friday with the office of U.S. Attorney Carmen Ortiz. The agreement calls for a maximum prison term of 10 years, plus forfeiture of criminal proceeds, including about $140 million, real estate, cars and boats, prosecutors said.

    The Telegram & Gazette, via Twitter and its own website, was first with the news of the formal guilty plea. The Boston Globe also was in the Worcester courtroom of U.S. District Judge Timothy S. Hillman this afternoon.

    More . . .

    NOTE: Our thanks to the ASD Updates Blog.