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Tag: TelexFree

  • Some Traffic Monsoon Promoters Are Zeek Clawback Defendants

    trafficmonsoonlogoUPDATED 11:51 A.M. EDT U.S.A. Zeek Rewards’ receiver Kenneth D. Bell had no comment this morning on reports that some Zeek clawback defendants also were participants in Traffic Monsoon, alleged last week by the SEC to have been a Ponzi scheme that had gathered at least $207 million.

    The reports appeared on RealScam.com.

    In March 2015, Bell sued Adrian Hibbert of the United Kingdom, alleging he had received more than $82,000 in Ponzi proceeds from Zeek. Zeek was charged with fraud by the SEC in August 2012.

    Another Zeek promoter listed by Bell as a winner in that scheme — Frank Calabro Jr. of the United States — also promoted Traffic Monsoon. Bell has expressed concern about online pitchmen moving from one fraud scheme to another.

    “Winnings” from MLM or direct-sales fraud schemes may be subject to return through clawback litigation.

    Both Zeek and Traffic Monsoon were purported “revenue sharing” programs. Paul Burks, the operator of Zeek Rewards, potentially faces a long prison term after his conviction earlier this month on multiple fraud counts.

    On July 26, the SEC civilly charged alleged Traffic Monsoon operator Charles Scoville of Utah with fraud. He has not been charged criminally and is believed to be residing overseas.

    Peggy Hunt of the Salt Lake City office of the Dorsey & Whitney law firm has been appointed receiver over Traffic Monsoon. Neither she nor the firm responded immediately this morning to a request for comment on the issue of common promoters between Traffic Monsoon and Zeek.

    The law firm confirmed to the PP Blog last week that there would be a receivership website for Traffic Monsoon, but the site was not yet live. The URL has not been released.

    Some Zeek clawback defendants also were participants in the AdSurfDaily Ponzi scheme. ASD was a “program” similar to Traffic Monsoon broken up by the U.S. Secret Service in 2008 in a highly publicized action.

    In U.S. domestic clawback litigation and in cases filed against non-U.S. residents, Bell has sued thousands of alleged Zeek winners for return of their gains and interest.

    Hunt’s plans with Traffic Monsoon are unclear.

    Hibbert appears also to have a page promoting the “My Advertising Pays” scheme.  MAPS, as it is known, has caught the attention of class-action attorneys involved in litigation against the TelexFree scheme broken up by the SEC and the U.S. Department of Homeland Security in 2014. The litigation also includes Zeek figures.

    TelexFree and Zeek may be the two largest combined Ponzi- and pyramid schemes in history, generating on the order of $4 billion in illicit, cross-border business and affecting hundreds and hundreds of thousands of people.

    The MAPS’ page attributed to Hibbert claims that MAPs operator Mike Deese “has been in the trenches with Zeek, ASD, Banners Broker, Ad Hit Profits, and many other advertising revenue sharing companies some of which continue to thrive and some that are not.”

    AdHitProfits also was a Scoville scheme. BannersBroker was a cross-border fraud that led to arrests in Canada.

    Separately, the Zeek page attributed to Hibbert claims, “If you want to make money and get paid everyday, you have to look at Zeek Rewards and understand how it works.”

    The SEC and federal prosecutors in the Western District of North Carolina said Zeek worked as a Ponzi scheme.

    Visit the TrafficMonsoon thread at RealScam.com.




  • EDITORIAL: With Conviction Of Zeek’s Burks, Another Senior MLMer Faces Prospect Of Decades In Prison

    paulburkszeekUPDATED 4:31 P.M. EDT U.S.A. Zeek Rewards was always inexcusably horrid, fueled by serial willful blindness and the sort of practiced disingenuousness that props up so many MLM “programs.” In dollar volume, Zeek ended up being more than seven times larger than the $119 million AdSurfDaily MLM Ponzi scheme that put ASD operator Andy Bowdoin in federal prison for six and a half years. By this measuring stick, Zeek’s Paul Burks could be staring at 45 or more years.

    As things stand, Burks, 69, faces a maximum of 65 years. He was convicted July 21 of mail fraud, wire fraud, conspiracy to commit both and tax-fraud conspiracy. The jury reportedly returned the verdict in less than three hours.

    Bowdoin, 77 when he accepted a plea deal before trial in 2012, received the maximum term of 78 months under the deal after earlier facing decades in prison. He pleaded guilty to a single count of wire fraud and acknowledged ASD was a Ponzi scheme and that the “program” never had operated lawfully from its 2006 inception. Other charges that could have led to a longer term were not pursued.

    Burks did not have a plea deal. The $939 million dollar volume of the Zeek scam will not be the sole measuring stick considered by U.S. District Judge Max O. Cogburn Jr. when Burks’ sentencing date comes around. Even so, 45 years is not out of the question, given the terms imposed on other Ponzi schemers. Scott Rothstein, for example, received 50 years for a $1.2 billion scam.

    Rothstein reportedly cooperated with the government after his convictions with the hope of receiving a sentencing reduction. Whether Burks will have a similar option or be able to argue successfully for mitigation is unknown.

    What is known is that even 20 years for Burks, nearing his 70th birthday, is a virtual life sentence. Like Rothstein, he has some serious thinking to do.

    Zeek was a tragedy for many, many investors lured in by promises of enormous returns. Can there be any doubt it’s also a personal tragedy for Burks and his family, given what the Zeeker-in-chief now faces?

    Why Burks ever would choose to pursue Zeek after what happened at ASD remains an open question. The frauds were remarkably similar. Bowdoin went to jail for an MLM scam when he was 77. The ASD case practically screamed, “Don’t do this!”

    “This massive scam is one of the largest in breadth and scope ever prosecuted by this office,” U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina said about Zeek.

    Another problem for Burks is that North Carolina, a U.S. banking center, can be downright unfriendly to Ponzi schemers. Keith Franklin Simmons was sentenced to 50 years for his $40 million “Black Diamond” scheme, a scheme much smaller than Zeek. Although that sentence later was reduced on appeal to 40 years, four decades is hardly a bargain — and Zeek had something else in common with Black Diamond in addition to operating in the same federal district in the same state.

    Indeed, with both Zeek and Black Diamond, the Feds pursued actions against banks that allegedly were asleep at the wheel. Ponzi schemes put economic security at risk.

    Burks had to know that Zeek was going to cause his world to crumble. He’d been an MLMer for years, he knew about the ASD case, Bernard Madoff, Rothstein, Ponzi pain in general throughout society and bizarre happenings in his own company.

    Why he moved forward is a sort of maximum imponderable. Why so many in the trade followed him after ASD is an even more disturbing question.

    Zeek’s wing of MLM, which also includes ASD, TelexFree, WCM777 and others, has harmed millions and millions of people. It is a vast wasteland of wink-nod disingenuousness and racketeering. The cross-border nature of these schemes is truly frightening.

    Kenneth D. Bell, the court-appointed receiver for Zeek, is pursuing class-action litigation involving more than 9,000 alleged Zeek winners. It is known that some of the winners also participated in ASD. These winners were at the scene of two crimes. Some of them were at the scene of more than two.

    This is a major problem for MLM, whether the trade acknowledges it or not. Recruits were told Zeek couldn’t be a Ponzi scheme because MLM lawyers were involved.

    And they were told that Zeek was on the up-and-up because it issued 1099 tax forms. These longstanding MLM myths have been shattered in both criminal and civil prosecutions.

    With respect to Burks’ sentencing, the government’s recommendation is not yet known. Lengthy sentences for senior-citizen Ponzi schemers, however, are hardly unprecedented. Madoff, in his seventies, received 150 years.

    Richard Piccoli, 83, received 20 years for a scheme far smaller than Zeek in dollar volume and number of victims. Piccoli advertised in Catholic publications, and is believed to have caused about $25 million in losses to about 250 people.

    Zeek advertised online and in MLM publications, creating hundreds of millions of dollars in losses while creating hundreds of thousands of victims.

    NOTE: Our thanks to the ASD Updates Blog.

     

     

  • IMPORTANT: Statement From TelexFree Trustee On Sept. 26 Claims Deadline

    UPDATED 11:23 A.M. EDT U.S.A. DEC. 22, 2016: The claims deadline has been extended from Dec. 31, 2016 to March 15, 2017, at 4:30 p.m. Prevailing Eastern Time. This marks the second deadline extension. Claims must be filed at TelexFreeClaims.com.

    Our brief on the earlier deadline is below:

    **_________________**

    The claims information below was received July 22, 2016, by the PP Blog from Stephen B. Darr, the court-appointed trustee in the TelexFree bankruptcy case.

    ** __________________________**

    September 26, 2016 at 4:30 p.m. (prevailing Eastern Time) has been established as the deadline for each person or entity (including individuals, partnerships, corporations, estates, trusts, joint ventures, and governmental units, wherever located), and Participants (collectively, “Claimants”) to file proofs of claim against the Debtors. Participants means persons or entities who purchased a membership plan in, or a voice over internet package (“VoIP”).

    Proofs of claim must be submitted electronically through the Portal and the Portal’s internet address is Telexfreeclaims.com.

    newtelexfreelogo




  • REPORTS: TelexFree Figure Murdered In Brazil

    Dorian da Silva Santos. known simply as Dorian. Source: TelexFree promo on YouTube.
    Dorian da Silva Santos. known simply as Dorian. Source: TelexFree promo on YouTube.

    3RD UPDATE 3:17 P.M. EDT U.S.A. Dorian da Silva Santos, described by Bloggers and in media accounts as a politician and promoter of TelexFree in Brazil, reportedly has been found murdered execution-style in the Brazilian state of Bahia.

    The news adds to a disturbing series of events that, since at least 2013, have become part of the TelexFree story.

    One account in Portuguese says Dorian was found Tuesday. He reportedly was shot about six times in the head “and had his hands tied behind him with a mobile phone charger wire,” according to a Google translation from Portuguese to English of a story at criativaonline.com.br.

    Authorities reportedly are trying to determine if the crime has any link to Dorian’s TelexFree participation through a company known as Ympactus in Brazil. With illicit business reportedly totaling more than $3 billion and hundreds of thousands of participants globally, TelexFree may be the largest MLM-related Ponzi- and pyramid-scheme of all time.

    Blogger Paul Joseph (Paulo José) wrote that Dorian was running for mayor of the city of Serra Preta and was found in the Humble district in Feira de Santana. The body was found in a vacant lot. Attributing information to police, Joseph reported that the body was found with “signs of torture and firearm shots to the head,” according to a Google translation of the original report in Portuguese.

    In the United States, Stephen B. Darr, the court-appointed bankruptcy trustee for TelexFree, said he was aware of the reports in Brazil about Dorian’s death. The news was awful, he told the PP Blog.

    “We do not believe he was a participant in the US-Based TelexFree operation — just Ympactus,” Darr wrote.

    There have been various threats surrounding TelexFree. In 2014, for example, there were reports in Peru about a TelexFree promoter being kidnapped and held in a van. The kidnapping reportedly was carried out by TelexFree members who ordered the man to withdraw money from a bank to make them whole.

    At least one judge and prosecutor in Brazil reportedly received death threats. American MLMers continued to promote TelexFree, despite the disturbing news in Brazil and the blocking of TelexFree assets there in 2013.

    Some TelexFree participants apparently were so eager to build a downline that they spammed the funeral notice of a TelexFree member who’d reportedly committed suicide in 2013.

    NOTE: On July 21, Globo.com reported in Portuguese that two suspects have been arrested. They reportedly are bandits who sought to rob Dorian because they believed he was rich and later engaged police in a gunfight.

    Google English translation.

  • DEVELOPING STORY: U.S. Attorney Carmen Ortiz ‘Has Been Recused’ From Prosecution Of TelexFree Figures James Merrill and Carlos Wanzeler

    U.S. Attorney Carmen Ortiz has been recused from the prosecutions of TelexFree figures James Merrill and Carlos Wanzeler, according to a government filing.
    U.S. Attorney Carmen Ortiz has been recused from the prosecutions of TelexFree figures James Merrill and Carlos Wanzeler, according to a government filing.

    2ND UPDATE 6:27 P.M. EDT U.S.A. A government filing dated July 1 — a Friday before the long Independence Day weekend — says U.S. Attorney Carmen Ortiz of the District of Massachusetts “has been recused” from the prosecutions of TelexFree figures James Merrill and Carlos Wanzeler.

    The document does not say why Ortiz no longer will oversee the cases against the alleged pyramid- and Ponzi-schemers. The recusal comes more than two years after Merrill and Wanzeler were charged criminally by prosecutors in Ortiz’s office and nearly 24 months after they were indicted.

    Ortiz, in May 2014, described the alleged fraud as “breathtaking.”

    At the time of this story, no media announcement about the recusal appears on the U.S. Attorney’s website.

    On Saturday (today), Ortiz’s office did not respond immediately to a request for comment.

    U.S. District Judge Timothy S. Hillman is presiding over the cases.

    Here is the text of the “NOTICE OF RECUSAL BY THE UNITED STATES ATTORNEY” dated yesterday (italics added):

    The United States respectfully notifies the Court that United States Attorney Carmen M. Ortiz has been recused from this matter. Pursuant to 28 U.S.C. § 515 and related delegations, an Associate Deputy Attorney General has directed and authorized First Assistant United States Attorney John T. McNeil to have the status, and perform all of the authorized functions, of a United States Attorney with respect to this case.

    Ortiz announced the appointment of McNeil as her first assistant on April 28, 2014. TelexFree declared bankruptcy just 15 days earlier, on April 13. The SEC moved against TelexFree on April 17, 2014.

    Section 3-2.170 of the U.S. Attorneys’ Manual says recusals are required “only where a conflict of interest exists or there is an appearance of a conflict of interest or loss of impartiality.”

    From the manual (italics added):

    A United States Attorney who becomes aware of circumstances that might necessitate a recusal of himself/herself or of the entire office, should promptly notify [the General Counsel’s Office of the Executive Office For United States Attorneys] at . . . to discuss whether a recusal is required. If recusal is appropriate, the USAO will submit a written recusal request memorandum to GCO. GCO will then coordinate the recusal action, obtain necessary approvals for the recusal, and assist the office in arranging for a transfer of responsibility to another office, including any designations of attorneys as a Special Attorney or Special Assistant to the Attorney General . . .

    Whatever TelexFree-related conflict exists, it appears only to affect Ortiz, given that her first assistant has been put in charge and the entire U.S. Attorney’s Office in Massachusetts has not been excluded from the prosecution.

    NOTE: Our thanks to the ASD Updates Blog.




  • Embezzled Banners Broker Pyramid Funds Allegedly Ended Up In ‘KulClub,’ Another Ponzi-Board MLM Program

    kulclublogo2ND UPDATE 2:25 P.M. EDT U.S.A. More horrible PR for the MLM trade: Banners Broker international pitchman and pyramid-scheme figure Kuldip Josun embezzled at least $3.6 million from affiliates, according to a receiver’s report.

    The money was deposited into a Swiss bank account held by an entity known as World Web Media Inc. and appears to have been used to start an “MLM program” known as “KulClub,” the receiver advised a court in Canada.

    Like the alleged $156 million Banners Broker scheme, KulClub had a presence on the MoneyMakerGroup forum, records show. U.S. authorities have alleged MoneyMakerGroup is a place from which fraud schemes are promoted.

    KulClub purports to be a “unique revenue sharing program in which KulClub shares the majority of its revenue with all its members. No other club can match it!”

    But msi Spergel inc., the Toronto-based Banners Broker receiver, said KulClub likely was started with stolen Banners Broker funds that never were recovered from the Swiss account.

    “The Receiver believes that Josun has since used the Swiss bank account funds for personal purposes, including the launching of his own MLM program called ‘KulClub,'” Spergel alleged. The receiver is seeking a sweeping order preventing the dissipation of assets.

    How did Josun end up with affiliate funds? After becoming the “main representative among international affiliates” of Banners Broker, the huckster allegedly hosted web events, flew to events in Europe, gathered money from hopefuls and kept it for himself.

    From the receiver (italics added/light editing performed):

    In that role, Josun would travel to meet with international affiliates, or potential affiliates, and conduct conference calls and seminars via videoconferencing. His day-to-day occupation with Banners Broker was to maximize Affiliate investment into the program, as well as to establish an international network Banners Broker Network. That is, he was responsible for encouraging the development of overseas affiliates into `super-affiliates’ (or “Resellers”), who would establish their own networks of affiliates.

    In his role as Banners Broker’s international representative, Josun would frequently fly to overseas locations with a significant amount of company funds. Those funds were used to advertise a lifestyle of success and luxury to potential affiliates. Josun spent existing affiliate funds lavishly in maintaining this facade, as he carried out a campaign to woo wealthy new affiliates to the Banners Broker enterprise.

    Josun’s spending in his role as Banners Broker’s international spokesperson lacked any effective oversight. No budgets were set for Josun’s business trips on behalf of Banners Broker, nor was there any control over his expenses.

    The Receiver asserts that Josun would regularly receive funds from affiliates meant to be spent on Banners Broker products. Rather than remit these funds to the company, Josun would redirect the funds to his own personal accounts in offshore jurisdictions, intending to place them beyond the reach of creditors.

    Similar allegations of cherry-picking have surfaced in the TelexFree Ponzi- and pyramid case. Like Banners Broker and KulClub, TelexFree had a presence on the Ponzi boards.

    Josun was hardly alone in misappropriating Banners Broker funds, the receiver alleged.

    Rajiv Dixit, a Banners Broker principal charged criminally,  “purchased six watches from Weir & Sons in Dublin, Ireland: three Rolexes and three Breitfings,” the receiver alleged. “Two of the watches were women’s watches.”

    The receiver’s allegations against Josun appear to be yet-another example of a scammer within a purported revshare “program” scamming both the “opportunity” itself and incoming participants. Although Banners Broker allegedly terminated Josun, it made little difference because the “program” itself was a scam.

    Read the receiver’s report.

    NOTE: Also see RealScam.com Banners Broker thread and this June 19 “Harrison” post.




  • After Vemma College Flap, Herbalife Products Marketed Through One Of Largest Catholic High Schools In United States

    HerbalifeMDHSconsentUPDATED 3:59 P.M. EDT U.S.A. It surfaced on Twitter today in the $HLF search thread that Herbalife products are being marketed through Mater Dei High School in Santa Ana, Calif. The Catholic school bills itself  “the largest non-public school west of Chicago.”

    Herbalife is under investigation by the Federal Trade Commission. Hedge-fund manager and Herbalife short-seller Bill Ackman has claimed the company is a pyramid scheme that targets vulnerable population groups. Herbalife denies the claims.

    Mater Dei says its 2,145-member student body consists of 38% Caucasian, 33% Hispanic, 19% Asian, 4% African-American, 1% Native American, 1% Pacific Islander and 4% “Other Race.”

    The school did not immediately respond today to a request for comment in which the PP Blog asked it whether it was aware of an Herbalife-related promo on its website, whether the promo was a school-endorsed activity and whether Mater Dei students were being recruited to sell Herbalife.

    Vemma, another MLM company, was charged last year by the FTC with operating a pyramid scheme, amid allegations the firm was targeting college students.

    Herbalife did not respond immediately to a request for comment on whether it was aware its products were being offered to Mater Dei students, whether students were being targeted for recruitment and whether the company had any concerns given the targeting allegations against Vemma.

    The Mater Dei website has a page styled “Herbalife Program > Consent & Waiver Form.” The page says “ALL current Mater Dei student-athletes are required to have a signed consent and waiver form on file in order to participate in the HERBALIFE Program.”

    A link to the form is provided, along with  a text prompt that says forms also are distributed by “coaches.” (See PP Blog screen shot of form.)

    A separate page on the Mater Dei website is styled “Herbalife Program > About.” It includes a phone number consistent with an Herbalife affiliate site in the name of “Coach Donte Mdhs.”

    The affiliate site says, “MATER DEI HIGH SCHOOL INFORMATION . . . All H24 Products are available to MD students (except Prepare).”

    A search of the Mater Dei website returns hundreds of results for the search term “Herbalife” (without the quotation marks). One of the results is an “Order NOW & Coupon Codes” page that says discounts are available to nearly two dozen school athletic teams and “Alumni, Dance, Faculty and Pep Squad” groups.

    In February, a man being sued for the return of his alleged winnings in the TelexFree MLM scheme claimed Herbalife executives and personnel helped sell him on the TelexFree deal. Herbalife did not respond to a request for comment on the claim.

    TelexFree generated more than $3 billion in illicit business, a court-appointed bankruptcy trustee claims.




  • TELEXFREE: Trustee Requests Stay In Lawsuit Against MLM Attorney Gerald Nehra, Others

    newtelexfreelogoUPDATED 11:14 A.M. EDT U.S.A. TelexFree Trustee Stephen B. Darr has requested a stay in the lawsuit against MLM attorney Gerald Nehra, the Nehra and Waak law firm and certain other individuals or entities accused civilly of helping the judicially declared Ponzi- and pyramid scheme gain a head of steam.

    “The Trustee seeks this stay at the request of the United States so as not to interfere with the proper administration and prosecution of the Criminal Action” against James Merrill, Darr advised Chief U.S. Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts.

    Merrill, an alleged TelexFree principal from Massachusetts, has been under indictment for wire fraud and conspiracy since July 2014. His alleged business partner Carlos Wanzeler also was indicted, but fled to Brazil, prosecutors said. Merrill’s trial is scheduled for this fall.

    Wanzeler allegedly fled the United States via Canada after TelexFree declared bankruptcy in April 2014. Darr has said the cross-border program generated more than $3 billion in illicit business.

    “The Trustee was required to commence the Adversary Proceeding before the Criminal Action could be resolved because the expiration of the Statute of Limitation relevant to these actions was approaching and was clearly going to expire before the Criminal Action was resolved,” Darr advised Hoffman. “However, in commencing these actions, the Trustee does not intend to interfere with the proper administration of the Criminal Actions nor prejudice the Government’s prosecution of those actions.”

    The government’s concern about proceeding with the adversary actions against Nehra, the firm and others appears to be that Merrill could gain an advantage in the criminal case through discovery in the adversary actions.

    In April, Darr alleged that Nehra and the law firm were “actively involved” in promoting TelexFree’s Ponzi scheme and “duping” participants. Nehra and the firm are fighting the claim.

    Nehra and the firm advised Hoffman they “anticipated participation in criminal proceedings related to the case,” but did not define the nature of the criminal proceedings or say whether they anticipated being called as witnesses or potential indictees.

    “The Adversary Proceeding arises from the TelexFree Ponzi scheme that was perpetrated on thousands of mostly working class investors, domestic and worldwide, by James Merrill and Carlos Wanzeler and assisted by various individuals including those named in the Adversary Proceeding,” Darr advised Hoffman.

    The judge has set a hearing on the request for the stay at 10 a.m. on July 27 in Courtroom 2, J.W. McCormack Post Office & Court House, 5 Post Office Square, 12th Floor, Boston.


  • Alleged TelexFree Winner Tries To Sue Trustee For ‘Emotional Distress’; Separately, U.S. Judge Asks Dominican Court For Assistance

    breakingnews725It may be a first in MLM clawback cases.

    Dwayne Jones, an alleged winner of more than $561,000 in the judicially declared TelexFree Ponzi- and pyramid scheme, is trying to sue Trustee Stephen B. Darr for “Emotional Distress and Anticipated Attorney & Court Costs.”

    In a proposed defendant class-action, Darr sued Jones and dozens of other alleged winners earlier this year for return of their gains. Jones was sued at a New York address. Acting pro se, he appears to have responded to Darr’s adversary complaint filed in Massachusetts federal bankruptcy court with a kit pleading from Maryland federal bankruptcy court in which he denied he was a TelexFree winner, raised jurisdictional claims and asserted the emotional-distress counterclaim against Darr.

    Darr responded on June 6, saying he “denies in full the sole allegation in the defendant’s Counterclaim, that the defendant is entitled to unspecified damages for emotional distress and anticipated attorney and court costs arising out of this litigation.”

    The trustee also entered affirmative defenses.

    Class-action cases filed by Darr against alleged TelexFree winners potentially affect nearly 100,000 participants globally who gained more from TelexFree than they paid in. The scheme allegedly created hundreds and hundreds of thousands of losers.

    Chief U.S. Bankruptcy Judge Melvin S. Hoffman of Massachusetts is presiding over the cross-border TelexFree case and adversary proceedings.

    On May 24, Hoffman asked judicial authorities in the Dominican Republic for assistance in serving process on more than a dozen clawback defendants located there.

    Darr contends TelexFree generated more than $3 billion in illicit business worldwide and that winners must return their gains.

    Kenneth D. Bell, the receiver in the Zeek Rewards case, also has brought clawback claims against alleged domestic and international winners in that scheme. Zeek is alleged to have gathered on the order of $897 million.




  • Sept. 26 Deadline Set For Filing TelexFree Claims; Claims Portal Opens As James Merrill Fights Evidence In Criminal Case

    newtelexfreelogoUPDATED 11:53 A.M. EDT U.S.A. Sept. 23, 2016: The claims deadline has been extended until Dec. 31, 2016, at 4:30 p.m. Prevailing Eastern Time. Claims must be filed through TelexFreeClaims.com. Our earlier story is below . . .

    **____________**

    TelexFree participants and others who may have a claim against the estate should read this important notice from bankruptcy Trustee Stephen B. Darr. It is styled “Notice of Deadline for Filing Electronic Proofs of Claim and Claims Procedures” and appeared on the docket yesterday.

    The electronic claims portal has been established at TelexFreeClaims.com and is operational, according to Darr’s notice. The deadline to file claims is Sept. 26, 2016, at 4:30 p.m. prevailing Eastern time.

    BMC Group Inc. is administering the electronic proof of claim (ePOC) form and its name appears on the TelexFree claims portal.

    Chief Bankruptcy Judge Melvin S. Hoffman of the District of Massachusetts has ruled TelexFree a Ponzi- and pyramid scheme.

    In a separate case, TelexFree principals James Merrill and Carlos Wanzeler were indicted in 2014 on charges of wire fraud and wire-fraud conspiracy. Wanzeler allegedly became an international fugitive by fleeing the United States for Brazil.

    Merrill this month sought to suppress evidence obtained as a result of a search of TelexFree headquarters in Marlborough, Mass., on April 15, 2014, two days after TelexFree’s bankruptcy filing, according to defense court filings in the criminal case.

    Through attorney Robert Goldstein, Merrill argued that the search by the U.S. Department of Homeland Security was “unconstitutionally overbroad and unparticularized” in that it targeted “all computers” and “all records.”

    Among other things, agents seized a laptop computer that day from TelexFree “consultant” Joseph Craft, according to the defense. Merrill argues that Craft’s laptop and all other evidence seized that day should be excluded.

    In 2014, the SEC alleged that Craft was TelexFree’s CFO and was in possession of nearly $38 million in TelexFree-related cashier’s checks on the date of the search.

    As the PP Blog reported on April 17, 2014 (italics added):

    “The Deputy Sheriff told Craft he could not take the laptop and bag and that these items would be subject to the search,” the SEC said in the affidavit. “[Homeland Security Investigations] Agents searched the bag and identified ten Wells Fargo Bank, N.A. cashier’s checks totaling $37,948,296.”

    Nine of the checks were dated April 11, 2014, just two days before TelexFree petitioned for bankruptcy in Nevada, according to the SEC affidavit and other court filings.

    The nine checks were “remitted to” James M. Merrill, TelexFree’s co-owner and former president. Of the nine, five were made out to TelexFree LLC “totaling $25,548,809, and one was made out to Katia B. Wanzeler,” believed to be the wife of TelexFree co-owner and treasurer Carlos Wanzeler,” the SEC asserted in the affidavit.

    The Katia Wanzeler check was for the sum of $2,000,635, the SEC alleged.

    A check dated April 3 was “remitted to” Carlos Wanzeler and made out to “TelexFree Dominicana SRL in the amount of $10,398,000,” the SEC alleged in the affidavit.

    TelexFree Dominicana SRL’s relationship to TelexFree was not immediately clear.

    On April 15, two days after the TelexFree bankruptcy filing and apparently just hours before the raid, Merrill “submitted an unsolicited order to sell $1,150,000 of his mutual fund holdings” and to have the money transferred to a bank in Massachusetts, the SEC said in the affidavit.

    “Bank statements show that two companies controlled by Craft received more than $2,010,000 between November 19, 2013 and March 14, 2014,” the SEC said in its complaint.

    NOTE: Our thanks to the ASD Updates Blog.




  • URGENT >> BULLETIN >> MOVING: TelexFree Trustee Sues MLM Attorney Gerald Nehra

    newtelexfreelogoURGENT >> BULLETIN >> MOVING: (6th Update 8 p.m. EDT U.S.A.) TelexFree Trustee Stephen B. Darr has sued MLM attorney Gerald Nehra and the Nehra and Waak law firm, alleging they were “actively involved” in promoting TelexFree’s Ponzi scheme and “duping” participants.

    Nehra and the firm have asked for more time to respond to the April 1 complaint, saying through court filings that they “anticipated participation in criminal proceedings related to the case.”

    Chief Bankruptcy Judge Melvin S. Hoffman extended the response deadline until June 1. The original deadline was May 2.

    Whether Nehra or the firm considered themselves potential TelexFree criminal defendants was unclear in the response. TelexFree principals James Merrill and Carlos Wanzeler are the sole criminal defendants to date.

    Separately, prosecutors in the Zeek Rewards’ criminal case against Paul Burks said in court filings in the Western District of North Carolina Monday that Nehra and law partner Richard Waak may be called as witnesses in the case against Burks.

    Nehra and Waak have settled with Zeek receiver Kenneth D. Bell, who alleged they “encouraged investors to participate in the [Zeek] scheme by knowingly allowing their names to be used in providing a false façade of legality and legitimacy and gave improper legal advice that allowed the scheme to continue far longer than it would have without the Defendants’ support.”

    Darr wants Nehra and the firm to return all legal fees paid to them by TelexFree between May 2012 and April 2014 — about $24,000. Hoffman has ruled TelexFree a Ponzi- and pyramid scheme, and Darr contends neither Nehra nor the firm provided any “compensable advice” during the two years they represented TelexFree.

    The trustee further contends that Nehra appeared in a YouTube video promoting TelexFree.

    MLM attorney Gerald Nehra at a TelexFree rah-rah event in California in 2014. Source: YouTube.
    MLM attorney Gerald Nehra at a TelexFree rah-rah event in California in 2014. Source: YouTube.

    Representing Zeek and TelexFree created incredible problems for the two lawyers. At least three of their MLM clients have been charged criminally and a mountain of litigation has been filed against Nehra and the firm, including actions by Darr, Bell and class-action attorneys.

    In the settlement with Bell, Nehra and Waak agreed to a confession of judgment for $100 million. They contended “that they acted in good faith as legal counsel,” but now “acknowledge and agree that, based on their current knowledge, during the period they served as counsel RVG in fact operated an unlawful Ponzi an pyramid scheme involving an unregistered investment contract that caused hundreds of millions of dollars in losses to innocent victims of the scheme,” according to filings from Bell.

    Government attorneys handing the Burks’ criminal case quoted the settlement language in their May 2 filing. RVG, or Rex Venture Group, was the operator of Zeek.

    Zeek and TelexFree combined allegedly gathered on the order of $3.9 billion while creating hundreds and hundreds of thousands of victims globally.

    A TelexFree video featuring Nehra appeared on YouTube in August 2013, according to Darr’s complaint. That’s two months after authorities in Brazil called TelexFree a pyramid scheme.

    Also in August 2013, MLM attorney Jeffrey Babener advised TelexFree that it was operating a pyramid scheme, Darr alleged in September 2014.

    TelexFree nevertheless continued to gather money until it collapsed in bankruptcy in April 2014, Darr alleged. The last payment to Nehra and the Nehra and Waak firm was made on April 3, 2014, just 10 days before the implosion, according to Darr.

    Read Darr’s complaint against Nehra and the firm.

    NOTE: Our thanks to the ASD Updates Blog.