TelexFree under criminal investigation in Brazil
Using the old “invest with us, do pointless tasks for us and we’ll pay you a ROI with new investor money each week” business model, it comes as no surprise that authorities in Brazil have launched an investigation into TelexFree.
On the 11th of January the Brazilian Bureau of Consumer Protection (known as Procon), after receiving numerous enquiries about the business and having launched their own investigation, put out a press release (in Portuguese) advising it had ‘detected evidence of crimes‘.
The investigation initiated by civil prosecution of Consumer Protection (no. 01/2013) shows several controversial issues and possible crimes that put consumers at risk in time to accept that kind of deal.
Among the possibilities, there is a breach in the Federal Law No. 1.521/51, art. 2, according to which it is a crime:
“Obtaining or attempting to obtain illicit gains at the expense of the people or of undetermined number of people through speculation or processes fraudulent (‘snowball’, ‘chains’, ‘pichardismo’ and any other equivalent)” including Ponzi pyramid”.
There is also the possible violation of the Code of Consumer Protection (CDC), with false advertising, failure of product information and company, abuse of weakness or ignorance of consumers and conditions unreasonable disadvantage, among others.
In light of this discovery, the agency lodged a complaint against Telexfree and forwarded it to the State Prosecutors Office, the Minister of Finance and the Federal Police.
None of which have thus far publicly commented but have no doubt since launched their own investigations into the company.
Not only do TelexFree utilise a Ponzi scheme business model for their “AdCentral” commissions, but they also utilise a pyramid scheme structure offering straight recruitment commissions and binary recruitment commissions. These commissions directly compensate existing affiliates upon the recruitment of new affiliates into the scheme.
Last I heard, having most likely exhausted the local Brazilian market TelexFree were now trying to make inroads into the US. At the time of publication, Telexfree is traffic ranked by Alexa as 57th in Brazil, 462nd in Portugal and 11,263rd in the US.
February 16th, 2013 at 3:02 am Julia M(Quote)
Sounds like another Ponzi bites the dust, leaving a trail of hopeless investor victims!
I was presented with this opportunity by over a dozen people a multitude of times. Something about it just didn’t make sense to me (how they are able to pay out so much “guaranteed” passive income for 52 weeks).
They want people in the U.S. to spend $49.90 per month for VOIP software that is in Portuguese, with no English translation. You can get VOIP as little as $5/mo on the web and Skype is free.
They have no customer service support and you upgrade by sending money via direct deposit to the company’s or upline distributor’s bank accounts, with no receipt. Sounds very shady to me and was only a matter of time.
Lesson of the day: If if looks like a duck and quacks like a duck, it must be a duck! Caveat Emptor!
February 16th, 2013 at 11:15 am Faith(Quote)
Their demise is over-exaggerated by the unknowing. They have addressed that when it was an issue back in January. It is a non-issue.
Honey, Julia, if you knew the compensation plan and how the products came in to play, you would know how they are able to pay out the income for 52 weeks. But I will leave that up to you. As adults I hope we have ‘graduated’ and are able to figure out compensation plans and the business model without being swayed by hearsay.
Te VOIP software is NOT in Portuguese! My oh My! Check out my video about the software here. Looks like English to me. Right here baby!
Their customer service needs work, I do admit. And you are wrong that the only way to upgrade is to give the upline money. Where in the heck did that come from? Everyone use their CREDIT/DEBIT cards.
If they are using their upline, have you thought about this … listen very carefully. It ain’t rocket science. Maybe those folks ain’t got no credit/debit card and their upline VOLUNTEERED to assist them in coming on board. What about that, eh?
They have issues in terms of customer support and growth but so did most of the most successful businesses and so does many businesses. Yawwnnnn… We wish they were wonderful.
Try getting a burger from the Burger babe while she talk to her friends on the phone and look at you as if you invaded her space. LOL!
Lesson of the day: If you don’t know… then you don’t know… and you become a creative inventor of the ‘truth’.
Wrong on many counts.
Caveat Emptor re: internet-lore!
Faith Sloan
February 16th, 2013 at 11:23 am Oz(Quote)
Sorry what? A non-issue? Since when were criminal investigations into MLM companies a non-issue?
Having gone over their compensation plan all Telexfree do is take new AdCentral investor money and use it to pay out owed ROIs to existing investors.
This is the same garbage survey based ROI scheme model that Speak Asia and Mister Colibri used. Replace surveys with watch ads (which is what Mister Colibri was) and you’ve got Telexfree.
There is no mystery here and the only unknowing people are those who pretend this isn’t what is going on or worse, ignore it.
I see customer service issues and the product language as being entirely irrelevant because they have nothing to do with the Ponzi scheme these guys are running. The AdCentral component of TelexFree completely undermines the legitimacy of the product or anything else they do.
February 16th, 2013 at 11:24 am Faith(Quote)
p.s. The market isn’t on the internet as you are. Educate yourself about the target market. They aren’t sitting online all day making phone calls. They are out in the neighborhoods with cellular phones and landlines talking to their family, friends, and business associates.
I pay over $300 a month with AT&T because I communicate daily with folks in the UK, Hong Kong, Japan, and other countries. Getting free long distance calls definitely brings down my AT&T bill considerably.
So the market ain’t what YOU think it is. You probably think weight loss products are only for obese people. You would be wrong there too. Or maybe you think that anabolic steroids is a bad thing used by self-obsessed body builders rather than folks with wasting syndrome.
It is okay. That is why YOU are not in strategic management or even operational/tactical management for any viable business. Cuz you don’t get it and it is okay. Other folks do get it!
Faith Sloan
February 16th, 2013 at 11:28 am Faith(Quote)
Oz you do not lack intelligence so cut it out. LOL
I wrote: Their demise is over-exaggerated by the unknowing. They have addressed that when it was an issue back in January. It is a non-issue.
You addressed the compensation plan.
If you want to address a point I am making, then please do so, Oz. I am talking about what you wrote about and again, that has been addressed. And yes, what I was referring to is indeed a non-issue.
You write “I see customer service issues and the product language as being entirely irrelevant …” I tend to agree with you there if your point and that woman above’s point is to talk about those issues when they were not related to the premise of what you have written.
Faith Sloan
February 16th, 2013 at 11:32 am Oz(Quote)
Well I suppose if english language software and customer support is all it takes to legitimise participation in an obvious Ponzi scheme for you… then I guess we’ll leave it at that.
February 16th, 2013 at 11:33 am Faith(Quote)
Oz, you know good and well i didn’t say that LOL! But it is okay. I hear you. I get you.
Have a nice day.
Faith Sloan
February 16th, 2013 at 3:57 pm K. Chang(Quote)
You can link “legitimate” enterprise with Ponzi schemes.
Zeek Rewards is a prime example… the penny auction is merely a disguise for the Ponzi scheme.
The question here is… who is really buying into Telexfree for the VOIP (when Skype is much better) and who is buying into Telexfree for the income? (And please don’t say the two are linked… That’s the same excuse used by pyramid schemers)
February 16th, 2013 at 4:46 pm Julia M(Quote)
Yes Faith, they do accept credit cards, in which you must submit your personal identification and upload to their “non-secure” servers. Come on, really? No wonder identity theft is on the rise!
And there really isn’t a product involved as the only benefit to ordering the VOIP software is to earn the binary bonuses, because the $299 and $1,375 start-up packages do NOT include the VOIP software it, but only the right to sell X amount of softwares. Tell me I’m wrong!
So an affiliate can join without buying the VOIP software, place 1-5 ads per day, and earn $20 to $100 per week, for 52 weeks, netting them over 250% p/y. The company never explained how they can pay this money out if product sales aren’t required.
There are Brazilians complaining on the net that TelexFree is a scam. Their top earner, the man supposedly making $200,000 per week, Sann Rodrigues, is a con-artist that has 5 alias, ran his own company “Foneclub” in the early 2000′s and was shut down by the SEC in 2006 in a $3.2 million scheme involving investors.
Don’t take my word for it (http://www.metrowestdailynews.com/news/x2103876128).
Strange how both Foneclub and TelexFree are operating out of Revere, MA, and how both company offer a specific profit (return) amount over a 1 year period, and also how affiliates doing bank transactions must send an email to Sann directly…yet he is only an affiliate, right?
It’s only a matter of time before it all comes crashing down like Zeek, and I feel sorry for the soon-to-be victims. I should know…I’ve already been down that road.
February 16th, 2013 at 4:54 pm Julia M(Quote)
And here’s a link to the official SEC complaint against Sann Rodrigues and Foneclub: http://www.sec.gov/litigation/complaints/2006/comp19715.pdf
February 17th, 2013 at 3:57 pm K. Chang(Quote)
And what proof do you have that Sann Rodriguez is top earner in TelexFree? Or is that a “self-claim” by Mr. Rodriguez?
February 17th, 2013 at 5:14 pm Faith(Quote)
Julia, you did NOT say anything about credit cards. Here is what you wrote:
“They have no customer service support and you upgrade by sending money via direct deposit to the company’s or upline distributor’s bank accounts, with no receipt. Sounds very shady to me and was only a matter of time. ”
And I said you were incorrect and I explained why.
Then I told YOU that they take credit cards. And they do NOT directly take credit cards from their site. It is done through a 3rd party merchant card provider which is indeed secure. So wrong again!
The other things you are talking about is pure speculation and based upon discombobulated logic. Sann Rodriguez and FoneClub has nothing to do with TelexFree except that you decided to create the connection because one commonality … Brazil.
But it is okay. People do that at times.
I counter that Bill Clinton is a criminal because Al Capone was a gangster involved in all kinds of criminal acts and Bill Clinton lives in the USA. Yeah… that is rather logical. LOL!
Best…
Faith Sloan
February 18th, 2013 at 5:54 am Timothy Whitfield(Quote)
I would just like to interject that as of the 13th there is in fact a customer requirement now and a new entry level position for 50 USD (Partner) that allows you to promote with no earnings on AdCentral.
Another thing is that TelexFREE has the 600 pound MLM attorney aligning everything now. The Partner position is a direct result of Jerry’s involvment in the company.
Timothy Whitfield
Managing Director
February 18th, 2013 at 8:19 am Oz(Quote)
Can I still join the company as an affiliate, pay hundreds of dollars and earn a $20 ROI each week paid out of new investor money?
If so, then who cares what else TelexFree attach to it?
Gerry Nehra?
If it’s one and the same, given he wrote Zeek Rewards’ compliance I guess that means a boatload of fake customers are on the way…
February 18th, 2013 at 8:25 am Oz(Quote)
Yep, looks like I still can. Taken from the TelexFree website today:
Sorry but hiring Gerry Nehra doesn’t make TelexFree any less of a Ponzi scheme.
February 19th, 2013 at 9:33 pm K. Chang(Quote)
That wouldn’t be Gerald “Gerry” Nehra, the attorney who can’t spot a Ponzi scheme TWICE, one actually in court telling a judge that a Ponzi scheme is certainly NOT a Ponzi scheme?
February 19th, 2013 at 10:38 pm M_Norway(Quote)
Do you still sell the AdCentrals?
The customer requirement for those will be that the company actually have clients or customers paying for the ads.
It’s the COMPANY that will need customers there, not the distributors. If you don’t have any clients paying for the ads, the “work” will normally be relatively meaningless.
February 19th, 2013 at 11:32 pm M_Norway(Quote)
He will probably find some weight loss companies around here, something to bring that “600 pound” situation under control.
An attorney can’t “align” a Ponzi scheme to become legal. You will need another type of expertise to solve that problem, e.g. someone bringing in third party clients who are willing to pay for the daily ads.
People bringing in more investors will only make the problem become worse.