TelexFree Court Status – 30th April 2014
The big news on the 30th was the granting of a preliminary injunction against TelexFree top pimps Santiago De La Rosa and Randy Crosby.
In addition to this order, which was handed down in Massachusetts, several other filings were made in the Nevada bankruptcy court.
As at the 30th of April 2014, here’s where we’re at.
Motions Filed
1. Objection to TelexFree’s motion for an extension of time to file schedules and statements (DoJ, April 30th)
Complaining about regulators seizing their equipment and having to “spend significant time addressing” the SEC and Massachusetts Securities Division complaints against them, TelexFree filed for an extension to file schedules and statements in their bankruptcy application.
Typically the required time to file the documentation is fourteen dates, which created an April 28th deadline. TelexFree stated that due to the above reasons, it would ‘not be possible to complete the Schedules within the 14 days allowed‘.
A decision has yet to be made on the motion, with the April 28th deadline already come and gone.
Now, filing an objection against the extension, comes the DoJ.
Without additional information regarding what efforts Debtors have made to obtain the return of their records, or to at least obtain hard copies of their customer and promoter lists allegedly seized by federal agents, the Court cannot determine whether Debtors’ request for a 49 day extension of time to file schedules is reasonable or necessary.
TelexFree had asked for a June 16th extension, with the DoJ instead arguing that a May 16th extension would be more reasonable.
If the Schedules were filed by this date, the Meeting of Creditors could go forward on May 22, 2014, as currently scheduled.
2. Memorandum of points and authorities regarding abstention (SEC, April 30th)
Filed against the possibility that the bankruptcy court might deny the SEC’s motion to move TelexFree’s bankruptcy hearings to Massachusetts, the SEC have filed a memorandum asking the court to then consider an alternative:
If the court denies the venue motion, the Commission submits that the most appropriate course of action is for the court to abstain from hearing these cases or suspend these proceedings in favor of the Commission’s pending enforcement case in Massachusetts.
The basis of the SEC’s argument is of course that TelexFree ‘operated an illegal pyramid scheme in the form of a “multi level marketing” company‘.
Late on April 13, 2014, in an apparent attempt to hinder impending civil enforcement actions by the Massachusetts Securities Divisions and the Commission to halt (TelexFree’s) brazen pyramid scheme, (TelexFree) filed for bankruptcy protection in this court.
It thus appears that this case is essentially a dispute between the pyramid scheme (TelexFree) and the state and federal police and regulatory authorities in Massachusetts; the filing of these cases in Nevada is a mere litigation tactic and was not initiated for the benefit of (TelexFree’s) creditors.
The first mention of a Receiver is made in the SEC’s filing, which notes
Because the majority of (TelexFree’s) unsecured creditors are also victims of its securities fraud, the Commission action, pursuant to which the Commission may propose a distribution plan with or without the benefit of a receiver, will provide (TelexFree’s) creditors with a convenient and equitable forum to resolve their claims.
The SEC also make the argument that the TRO and preliminary injunction in place against TelexFree, its management and top promoters would ‘render continuation of (the bankruptcy case) in Nevada an exercise in futility‘. The reason for this being that ‘any action taken by TelexFree that affects their properties’, would put them in violation of the TRO and/or preliminary injunction.
This next point raised was particularly interesting.
The SEC name themselves TelexFree’s largest unsecured creditor, because they are ‘seeking disgorgement of all ill-gotten gains raised by’ TelexFree, in addition to any civil penalties that are to be handed out.
If, when the dust settles, and the SEC prevail in their action against TelexFree (and with TelexFree thus far seemingly ignoring the Massachusetts action, by all appearances they will),
(the SEC’s) claim will not be dischargeable in (TelexFree’s) Chapter 11 cases.
According to the Chapter 11 bankruptcy code, section 1141(a)(2)(A)&(B) and 523(a)(2)(A)&(B),
fraud debts owed to a governmental unit, such as the Commission (are) excepted (in Chapter 11 cases).
In summary, the SEC argue
it is likely that the securities laws regulatory actions will be the most significant issues facing (TelexFree) and their principals, and determination of securities laws issues will predominate.
3. Objection to DoJ’s request that a Chapter 11 Trustee be appointed (SEC, April 30th)
This objection against the DoJ’s application is based on the argument that the appointment of a Chapter 11 Trustee would be a “moot point”, should the SEC prevail in either having the Chapter 11 proceedings abstained or moved to Massachusetts.
Furthermore the SEC claim that given there’s “no current business activity” within TelexFree (due to the TRO currently in place), that the appointment of a Chapter 11 Trustee is not required.
Orders
1. Preliminary Injunction granted against Santiago De La Rosa and Randy Crosby
On the 30th of April, the Massachusetts District court granted the SEC their requested preliminary injunction against TelexFree top promoters Randy Crosby and Santiago De La Rosa.
You can read more about the preliminary injunction being granted in our separate article, published earlier today.
Important Upcoming Dates
- May 2nd (Nevada) – Mammoth hearing to decide on SEC’s request to move bankruptcy proceedings to Massachusetts, DoJ’s request that a Chapter 11 Trustee be appointed, TelexFree’s objections to the TRO, the final First Day Orders, and ‘whether the interests of creditors and the various debtors are better served by the suspension of all (bankruptcy) proceedings in these jointly administered cases‘
- May 7th (Massachusetts) – Hearing in the SEC case to decide on whether a preliminary injunction will be granted against TelexFree, Carlos Wanzeler, Jim Merrill, Joe Craft, Faith Sloan and Sann Rodrigues
- May 22nd (Nevada) – First meeting of TelexFree creditors
- May 28th (Nevada) – Hearing to decide on TelexFree’s motion for employment of their lawyers
Final Thoughts
Bit of a mixed bag today but in a round-about way I suppose things make sense legally.
The preliminary injunction against De La Rosa and Crosby was to be expected, they basically had no argument against it. Neither does TelexFree and the remaining defendants, so expect to see more of the same on May 7th.
The motion against TelexFree’s request for an extension of time is neither here nor there IMO, as I imagine the bankruptcy case will be either moved, abstained (ignored) or suspended on May 2nd.
The abstention could be interpreted as a sign of weakness in the SEC’s case, but I think it’s more of a covering of their bases.
Basically the argument being made is that the appoint of a receiver or alternative distribution plan initiated by the SEC, is a far better option for recovering funds for TelexFree affiliates over the “suck eggs” TelexFree are proposing with a Chapter 11 bankruptcy.
Given that TelexFree only made $1 million in VOIP sales in two years, most of which was no doubt affiliate purchases for ROI qualification, the notion that the company will be able to make anywhere near what is owed to investors is laughable.
That of course didn’t stop Stuart Macmillan from yesterday declaring that he believes TelexFree ‘will be able to maintain 140,000 retail customers and generate $50 million a year going forward‘. What a riot.
Initially I thought the SEC’s objection against the DoJ’s request a Trustee be appointed, but after going through the objection I can see it makes some sense. The SEC (and rightfully so) seem pretty confident that they’ll either have the proceedings moved or abstained from by the court. As such there’s not really any need for a Chapter 11 Trustee.
Personally I’d have thought the two departments would have had some communication between them as to work out the best approach here, but I digress. Meanwhile I’m not sure why the SEC just didn’t leave the motion unopposed.
Should, for whatever reason, both their motions (venue change and abstention) be denied, then at least regulators have a fall-back with the Chapter 11 Trustee appointment (which would put TelexFree in control of the DoJ).
Then again, if the SEC are confident the included case-law in their respective motions wholly supports what they’re asking, why not oppose the Trustee motion. It’d certainly add a bit less confusion on May 2nd, which is shaping up to be a big one.
I’ve cleared my schedule Saturday and expect to be stuck behind the computer for most of the day.
In related news, TelexFree was also fined R$5.6 million ($2.5 million USD) by Brazil’s “National Consumer” (Association), for ‘injuring thousands of consumers across the country‘.
Senacom, a division of the Ministry of Justice, began investigating TelexFree back in June 2013 after the company was shut down in Brazil. Senacom issued the fine yesterday, after their investigation revealed TelexFree to be “pyramid scheme”.
iG attempted to contact TelexFree’s Brazilian lawyers, but received no response. Carlos Costa, TelexFree’s Brazilian spokesperson, hasn’t been seen or heard from since TelexFree tried to pass off his wife as its largest creditor back in mid-April.
Thank you for your continuous coverage Oz.
I know it feels repetitive but thank you is the only comment I can say after also sharing the news to so many people. Your hard work is giving me more hope that there are people in this world who actually care for the truth. No matter how good or bad it is…
There are too many people who only want to hear what they want to hear…
I appreciate the well-wishes.
I think realistically things will slow down mid-May (if not after the 2nd entirely). Then we can all take a breather.
I’m slated for a break mid-year so the SEC better not have any more surprise MLM busts up their sleeve!
Meanwhile, another administrative “Fine” in Brazil:
http://g1.globo.com/economia/noticia/2014/04/ministerio-da-justica-multa-telexfree-em-r-55-milhoes.html
I am really concerned with the promoter Pr. Julio Silva he has traveling all over the country and all over the world promoting his Telex Top Team. I was informed by his crew that they had personally registered over 40,000 people including myself. He was mentioned by Sans Rodrigues on several videos!
He continues to live a lavish life and post on several social media sites how great his life is and how he has moved on to another scheme! Can anyone tell me if anything will happen with this guy????
Thanks allot for posting update abt telexfree. Me and my friends took 20k $ loan from HSBC London for this business and guess what, the day We joined after 10 days it all got screwed up.
We don’t know how we going to pay back this money To bank or we have to kill ourselves. I don’t want any Profits in just pray to god that our money which we Invested just want it back, that was my first and last Time in this sought of stupid business.
please Keep updating us because in uk we have very less. People of telexfree and all the videos are in Portuguese Thanks allot.
Nothing will happen too him, his not that big of a fish
Does anybody has a link or pdf file with telexfree contract? i need it
I invested in the month of February, 10,500 dollars and in March, closed, the promoter who joined me this fraud has gone …
I just hope I made my reintegrate value, nothing more.
I fail to understand why people in your situation do nor press charges locally on their uplines or team leaders, instead of relying solely in the outcome of this whole Telexfree mess.
The probability of getting at least part of your money back by a court or pre-court agreement, even if not by a successful trial, is certainly way higher than anything else.
Here’s a list of TelexFree articles here. There’s more than 80 of them, so only the newest ones will be relevant.
behindmlm.com/category/companies/telexfree/
I don’t expect people to read anything. The list is for overview purposes, to know where to find information in case they need to find it themselves.
COMPLAINT FORM
Mass-Sec (Secretary of the Commonwealth of Massachusetts, Securities Division), also referred to as Galvin’s office, has an Investor Complaint form designed for investigation purposes.
http://www.sec.state.ma.us/InvestorComplaint/telexfree.aspx
It’s not a “proof of claim” form, you can’t use it to register a claim. But you can use it to add more clarity to how Telexfree operated e.g. in other countries.
HYPOTHETICAL EXAMPLE
I tried to fill out the form as an example for a hypothetical investment in another thread. I used a hypothetical example where I had a total of 9 AdCentral Family in separate accounts, and tried to identify the investments correctly (date, type of AdCentral / account, amount paid, payment method).
Posts #100 and #102 are the examples I tried to fill out. Post #118 is about the logic I used, e.g. separating different types of investments.
The form does not ask for details, e.g. bank account number, credit card number. It simply asks for who you are, info about your investment, info about VOIP sale or personal use of the VOIP service, any additional info.
USE YOUR OWN BRAIN
I have only identified SOME types of problems, e.g. some people paid directly to their sponsor rather than to Telexfree. My example identifies that type of payment method.
* Promoters had multiple accounts, multiple usernames. I identified that.
* Promoters generated fake customers to qualify for binary commission, and I identified that type of purchases.
* I identified “paid directly to my sponsor FastCash21’s bank account” for one of the payments. For the other payment I only stated “Credit Card”. That can be a little too vague, Telexfree can have used multiple accounts.
You must use your own brain. My example was about a hypothetical investment, hypothetical reinvestments, hypothetical VOIP purchases.
The Investor Compaint form may increase your own chances to get more of your investment back, but I don’t think people high up in your upline will like it.
That’s generally not the right method. He was scammed by the company itself, not by the promoter. He became a promoter himself, so a court can see it as “in pari delicto” (of equal guilt) if he’s trying to sue another promoter.
The method will only create chaos if enough people use that idea. In an upline of 5 people A, B, C, D and E
* E will need to sue D
* D will need to sue C
* C will need to sue B
* B will need to sue A
All of them will focus on the ones who recruited them rather than on where the money ended up. They can meet defense arguments like the “in pari delicto” argument, or arguments about “You paid directly to Telexfree, I only received $20 commission, you can’t blame me for the whole amount”.
You can look at the Mass-Sec complaint form mentioned in my post #10.
I don’t have enough information about the Complaint form to recommend it. It asks for general information about your investment and your use of the VOIP service, for investigation purposes rather than for how to handle individual claims.
That’s what I would do. Where I live I could file and have the issue resolved by an experienced judge in Small Claims Court for about $180 out of pocket.
That method has been discussed several times. Claims directed against a recruiter can’t easily be resolved by a court, even the claims where you have paid directly to the sponsor.
When you join Telexfree, you become a promoter yourself, and you probably know the risks of joining online programs that pays more than 200% ROI per year. You have “unclean hands” yourself, rather than being an innocent victim of a fraud.
Which arguments would you use to present your claim? You should be able to prove that you have a valid claim against your sponsor.
Carlos’ investment was $10,500 in February 2014.
* The compensation plan changed in March 2014, and his sponsor was clearly not responsible for that.
* The payments stopped in late March / April 1st, and Carlos’ sponsor can’t be blamed for that either.
* The bankruptcy was filed on April 13th. Carlos can’t blame his sponsor for that either.
* “My sponsor should have known it would fail” is a moot argument. They BOTH should have known about the risks, and they both should have stayed away from that investment.
* “I paid directly to my sponsor, and he has the money” can be met with counter arguments about payment methods and about the compensation plan.
Paying directly to a sponsor was actually among the “normal methods” commonly used when people joined Telexfree. It wasn’t a method invented by the sponsor for fraudulent purposes. The sponsor received his usual back office commission, nothing more and nothing less.
* “I should at least receive the commission he earned when he recruited me” can be met with arguments about that the case probably will go into Receivership. The sponsor can not pay off individual creditors directly.
LOOOOOOL I was not expecting to see the US Trustee talking like that in an official document! 😀
Though I don’t know the exact details of this case, I believe Carlos could one of the victims scammed by “Equipa Sorrisos” on their tour to London & Channel Islands last February, targeting Maderian/Portuguese expatriate communities in both places.
In that case, it was most probably paid in cash to some promoter (who now has disappeared, as Carlos said), a parallel business not in control of Telexfree, and an illegal securities sale as well.
Though IANAL, I fail to see how Carlos – a victim of an illegal securities sale – incurs on any risk of being sued himself. What you say about “in pari delicto”, I presume applies only to those who actively recruited and engaged in parallel sales, not to people who simply believed they were being paid to do advertising, in the fair belief it was a legal activity.
Furthermore, any promoter who sold positions for cash after 1 April have done it in bad faith and with the full knowledge that those credits could not be withdrawn by then. Carlos has bought it in February, but an unfortunate lot bought it after 1 April. That’s a scam in all glory.
We don’t even know how these cases of “positions for cash” will be dealt with by SEC, and there is a fair possibility that those people are not entitled for any refund at all.
I maintain that the best course of action and the easiest and fastest way to recover at least some cash would be to sue, seeking an agreement between both parts for restitution of the money. Small Claims Courts were made for something.
See docker 137:
Those are the email exchange annexed by Stuart MacMillan. Could this mean they are false? At least seem to be problematic enough in face of referred “Federal Evidence”.
I don’t really care about all of that. Once I knew with certainty the amount of my loss I would tell my story to the Small Claims judge and let him/her decide.
There’s even a good chance the counter-party wouldn’t show and I would get a judgment by default.
Nope, I have identified Telexfree to be a Ponzi/pyramid hybrid, with the Ponzi scheme as the most significant part.
* SEC has identified it as a pyramid scheme.
* Mass-Sec has identified it as a Ponzi scheme.
Carlos will have a very weak legal case if he tries to prove that only the recruiters can be blamed. His sponsor can point out that most people actually were attracted to the $20 per AdCentral per week, “you don’t need to recruit anyone or sell anything, simply post 1 ad per day and get paid weekly”. And so was the sponsor [attracted to that part].
Carlos had the same options to recruit other investors. If his sponsor participated in a pyramid scheme, so did Carlos. The fact that Carlos didn’t recruit anyone doesn’t make any legal difference.
That’s a different situation. I can’t analyse that, I have too little details. I know people responded to buying old AdCentral contracts after March 9, and potentially after April 1st. I have tried to focus solely on the more “normal methods”, to avoid making it too complicated.
The changes in the compensation plan created a new “market” after March 9th. The old contracts were more “lucrative” than the new ones, so people bought them to make more money. I wouldn’t have felt very comfortable presenting an individual claim about that in a local small claims court.
The best course of action is normally to start from a specific point = “identify the case correctly”.
* start with the case itself as a whole
* identify your own involvment correctly
* look at existing solutions, etc.
You will see that individual claims through class action lawsuits automatically will be stayed when a company is placed into Receivership. I’m talking about lawsuits in the same jurisdiction here.
A small claims court can be unable to resolve claims if the sponsor identifies the Receivership as the MAIN defendant. “You have sued the wrong guy, with wrong type of claim. Try to file a claim against the Receivership?”.
I wouldn’t recommend ideas like that to anyone. “You CAN win, but only if you don’t meet any resistance”. 🙂
You will obviously lose if you meet the right type of resistance, e.g. from someone more experienced. Then you’ll need to pay your own expenses and your opponent’s expenses.
It may feel “affordable” a couple of times, but I don’t think you should have it as a habit.
Telexfree “leaders” instructing affiliates not to fill the complaint form.
The sponsor had to be authorized by Telexfree in order to exchange cash for positions. Most of the time they did that sort of parallel business on their own, causing damage to the company (according to Graça Luísa, Equipa Sorrisos).
This does not detract in anyway that it was an illegal sale of unregistered securities.
The service sold was not illegal on itself. I don’t see how someone who engaged with Telexfree in order to post ads against a payment and do not engaged in recruitment, was doing something illegal.
Please show any evidence that a victim of a scam can be charged on court for being scammed. That’s what you just said.
You are falling into judgements of intentions, which is always swampy terrain. You can’t prove someone had an intention to do something basing that conclusion solely on your own judgement.
This is absurd. I also have the same options as an assassin, and I don’t go around killing people. Of course it makes a legal difference, nothing in his relation with the company implies he had to scam other people with the Ponzi.
I still can’t see how someone asking to buy the moon can detract from the fraud of someone actually selling it to them, let alone causing the scam victim to have problems on court.
In the early times of this scam, only crooks and fools joined in. In recent times, after Telexfree being paraded on mainstream Portuguese TV in various news pieces as a sort of El Dorado creating millionaires everyday, without informing people it was about the illegal selling of securities, many people bought the service in good faith.
Those TV news pieces broadcasted in January, so you see: That’s those who joined and lost all.
I don’t find any way someone can charge these people as being scammers, and IMO they have not any reason to be frightened from pressing charges against those who fooled them, in case they feel they have been fooled.
The method was most commonly used in TEAMS, e.g. as a protection against clawbacks (or as a method to avoid taxes). None of the people I have communicated with mentioned anything about “being authorized”.
The method is known from other programs too, e.g. from SpeakAsia Online. It’s a method to avoid too many transactions to and from an organizer, a method to reduce suspicion from bank people and authorities.
It’s normally also less costly, and faster (faster than overseas wire transfer, faster than Credit Card transactions). The PRIMARY function of that method is to act as one (of many) possible payment methods. Fraudulent use of it will be a secondary function.
In theory, ALL payment methods can be fraudulent. CASH payment is probably the most commonly used fraudulent payment method, but we can’t prohibit the use of cash.
Graça Luísa may have had her own restrictions, e.g. maybe she didn’t want that method to become too commonly known? Maybe she wanted to control the use of it, so she could benefit from being one of few “authorized” ones? That was also very common, uplines sending internal funds downwards in the system, receiving cash in exchange.
I didn’t use that argument, I used “will have a very weak case”. I said it would be difficult to sue the recruiter, because they BOTH participated in the same Ponzi or pyramid scheme, in relatively equal positions.
“But I didn’t recruit anyone” isn’t a good argument to use in court, e.g. to prove that you’re the victim while the recruiter is the perpetrator.
It has been discussed here several times. Most “sue the recruiter” ideas have several flaws. You can file criminal charges against people near the top in some legal systems. That may help the police to resolve the criminal parts of the case. But that’s a very slow method to recover money.
The Trustee’s objection was astonishing and humourous and perfectly tuned to the absurd Motions the Debtors are throwing up. I really had to laugh.
I don’t know the rules but if McMullin is attempting to use e-mails that he wrote as evidence to support his own Declaration I can see why that is a problem.
This quote from the objection really hit the target….
“MacMillan provides no explanation for why he felt it necessary to terminate Debtors’ entire former management team.”
In Ponzi schemes, the default role is “victim” (both for net winners and net losers). They can legally receive their OWN investment back, but net winnings will be ‘ill-gotten gains’.
In pyramid schemes, the default role is “participant” = someone who has joined a recruitment based opportunity with the intention of making money from recruitment of other participants. All payouts can be defined as illegal, even people’s own principal investments.
I don’t think we should use an assassin as an example. An assassin will normally need to do some preparations for the crime, e.g. buying a gun. That can be a criminal act in itself = “preparing for a crime”. And then the logic will become rather irrelevant if we allow for that type of example. Most men are equipped with the right “weapon” to become rapists. 🙂
Try to limit the scope to monetary claims against someone?
TV-stations and magazines can be fined for promoting a pyramid scheme. Blog owners can be fined. I’m talking about paid promotions here, not news stories.
Troy Dooly / Mlmhelpdesk.com was fined $3,000 plus $3,000 disgorgement of ill-gotten gains for pimping Zeek Rewards / failing to disclose to his readers that he had a contract with Rex Venture Group about trying to improve Zeek Rewards’ online reputation.
One of his articles was titled “Bloggers with potential hidden agenda”, about this website in particular. 🙂
Here’s a quick timeline.
April ? Mcmullin hired
April 10, Runge Hired to “safeguard existing cash”
April 11 Merril Withdraws funds
April 13 bankruptcy filed
April 15 Massachusett Security Division (“MSD”) files
April 15 Search Warrant Executed… Craft “bagged”
Apri 16 TRO granted to SEC
April 17 Court informed that Craft, (CFO, Board Member and signatory) is no longer associated with the Debtors.
And here I was thinking things would be quiet till the 2nd.
Stupid bankruptcy proceeding, the paperwork never ends!
Guess I’ll have a May 1st court update out shortly.
You can look forward to the May 2nd mammoth hearing. 🙂
If you’re lucky, the bankruptcy court will abstain from hearing those cases or suspend them, making that the most important update, while other details will have lower priority.
Astounding really. In just two weeks the docket numbers have climbed to 137. The cost of these things is just staggering. You’ve done a GREAT job of keeping on top of it.
If this whole bankruptcy circus is blocked and argued to be a sham and part of the fraud, is there a possibility that all those parasites (lawyers, KCC, MacMillan, Runge and so on) will not be paid from Telexfree assets, therefore not contributing for further dissipation?
I seem to recall someone saying that a fraud can’t be defended using the assets gained by way of that very fraud.
Hey Oz…..quit your whining..and get typing. : ) Tomorrow’s a big day for all of us. You can sleep in August…lol
You know we all appreciate what you do and we know how much time and personal sacrifice it takes. I’m sure that doesn’t help when your saying…hey can’t do that Saturday because my blog is going to be blowing up!!!! : )
ps. Bite your tongue Norway….I want to see the Telex **** hit the fan tomorrow.
And we are talking here about what is mainly a Ponzi scheme. Most of the people I know who entered this were not recruiters, but passive gainers (or whatever expression can be used to describe it). Most of them have not gained a dime, instead, they loosed all they invested. I can’t understand how these people can’t press charges against both Telexfree and their uplines.
Seriously, I went to bed and it was 120 something. I wake up and it’s 149 or so.
WTF?
Lawyers need to chill the fuck out and then some!
I’ve already mentioned this in a previous post, and I’ll mention it again, since I’ve got confirmation of it as a fact as well as new data. I believe this is important to take a look.
Lelio Farias and Graça Luísa (“Equipa Sorrisos”) a few days ago launched a new Ponzi named Telexmax. For now it is restricted for diehards of her former team “Equipa Sorrisos”, tough it’s not exactly a well kept secret here in Madeira – It was described today in a letter to our main newspaper, and was mentioned this night in a talk show hosted in RTP-Madeira, our local TV channel.
Background:
Telexmax is a Frankenstein part GDI part Telexfree. It seems to be a jointventure between Ash Mufareh (from Ashmax, itself a two headed creature part GDI part “Freeway to Sucess”) and Lelio Farias (Telexfree, Disk-a-Vontade).
It was initially created to help promote Telexfree using domain tools and other spamming stuff, and was actively promoted by Lelio Farias last December while he was spending the month at his home in Sarasota, FL, where a number of domains associated with telexfree and Telexmax are also registered.
Telexmax itself reverses to Ashmax.
Telexmax already has his own BO.
Telexmax operates on top of GDI.
This is how the new Ponzi works (inside info from “Equipa Sorrisos”, translated – apparently written by Lelio Farias himself):
Promo material:
https://fbcdn-sphotos-d-a.akamaihd.net/hphotos-ak-prn2/t1.0-9/q71/s720x720/10297891_1420194368248661_4390874937868829853_n.jpg
I can’t understand how these people can’t press charges against both Telexfree and their uplines.
There are many legal avenues to acheive resolve to a dispute. In this case….I think it’s been said to the point of …nausea ..really you don’t get it?….Wait until the USA “court” does it’s thing. It will not be quick and it won’t be pretty.
For anyone that participated in this scheme..what ever your reason, what ever your investment amount?…what ever the country you made the investment from.
YOU WIll HAVE TO WAIT!!!
Right. You’ll have to wait 2 years or more, to find out that you have been cheated by your upline and your problem is not with Telexfree but with some guy who used to been around years ago, so you’re not covered by the SEC refund.
Then, after all that time, you finally may press charges locally against the fraudster. Very intelligent approach indeed.
(not!)
It was promoted and used here mainly to prevent taxes. It was often presented to newbies as “the best way”, “the only way”, “everyone wins way” to join.
I believe there was a written rule about it, payment of 10% commission to Telexfree and previous authorization required.
I don’t believe this without former jurisprudence. I don’t believe without proof supporting it that someone who joins a company to publish advertisements, and that’s all what they have done there, is in the same position as people selling unregistered securities for the same company.
You are assuming people already knew it was a Ponzi when they joined it, and on top of that you are assuming they joined it to make profit from the Ponzi. I seriously doubt any court in a civilized country would agree with you there. You’re placing the burden of proof on the wrong side of the equation.
And I don’t believe you’ll be able to find any jurisprudence at all to support your claim. A similar situation occurs when someone buys counterfeit goods. The justice (both Portuguese and Brazilian) absolutely welcomes any denounce by someone who bought the counterfeit goods, independently of that person having or not previous knowledge about the counterfeit state of those goods.
I don’t know where you’ve got that weird idea that scam victims are in the same position as scam vendors, but it certainly doesn’t hold any water.
In case of pyramid schemes, scam victims *are* scam vendors. Which is why it’s also known as “chain recruiting” or “endless chain” scams.
The answer to the question will be different in each jurisdiction.
In most states of Australia, for example, the following applies to pyramid schemes:
As always, it is recommended that consumers consult a lawyer or some other professional experienced in these matters and with knowledge of your particular circumstances and jurisdiction.
I discussed it with US promoters. They focused on clawback protection, didn’t mention any 10% fee and didn’t mention “authorization”.
The method is built into the back office software, openly available for anyone to use. This is the first time I have heard about “10% commission”, “authorization” and “written rules”. I have known about the method for more than 2 years, and have probably discussed it with 50+ people in a few different programs.
It doesn’t really hurt the company either (as a Ponzi scheme). It will stimulate reinvestments / keep reserves in the back office / reduce withdrawals.
In SpeakAsia, it was mainly used to reduce the 3% (min. $7.50) transaction fee for withdrawals, and to reduce transaction time (up to 3 weeks). It was presented as a withdrawal method rather than as a payment method. People were encouraged to use it.
Here’s how it was described by SpeakAsia itself:
I believe the 10% fee and the “authorization” may be local in that particular upline. BTW, people use other methods to avoid taxes, so they don’t really need that method for tax purposes. A pre-loaded debit card will allow for anonymous withdrawals from ATMs.
WE all know that the chain is not really endless. Eventually it ends and some trusting person(s) get burned. If the schemes weren’t plausible they wouldn’t work.
I do not believe that everyone is a scam vendor because not everyone is, or ever had the intention of selling.
Well, looks like Telexfree has just cleaned up its website. No more language change option, no more fake office pictures, no more nothing… LOL.
But they still keep advertising their “Telexapp”…
Back to normal, now…
I believe you may have been wrongly informed, M Norway.
The 10% commission fee to Telexfree and the previous discussion and approval by Telexfree were mandatory and a written rule from Telexfree Inc., and part of the information received upon subscription.
I don’t know if you understand Portuguese, but here you can see a copy of the information received after registering with Telexfree:
https://scontent-a-fra.xx.fbcdn.net/hphotos-frc1/t1.0-9/10303301_636141376474355_8830550748702606953_n.jpg
For the Australian Consumer Law (ACL, 2010), legal expertise seems to be highly REQUIRED. 🙂
The PDF from Western Australia has its own interpretation of “any person”. The term “any person” does exist in the law, but the interpretation doesn’t. It doesn’t exist in other sources either, e.g. Wikipedia.
“Could choose” isn’t a legal term. Normally a lawsuit will need to identify the involved parties correctly, based on how they have been involved. You can’t use the logic “A was the one who tricked me to join the scam, but I believe B will be easier to sue, so I prefer to sue B”. You can only sue a party for the damages he clearly is responsible for.
The introduction to the law identifies it like this:
The law itself states it like this:
Consumer Protection Laws normally have definitions for “who is responsible for what”, in the whole chain from manufacturer to wholeseller to retailer to consumer.
You can’t sue the retailer for something the manufacturer is legally responsible for, but you can sue the retailer if the manufacturer and the wholeseller both are impossible to find.
I think I will go with the above statement. After reading all the discussion of Australian law (WTF?) and who is legally liable for what, I think that victims of this massive fraud who have lost all or part of their principle investment would be best served by waiting for the court proceedings in the USA to go through its course.
In this particular fraud, I feel that individuals will be best served by thinking as a group of victims rather than individual victims looking to recoup their individual losses.
Can you imagine the clusterfuck that will take place if everyone sued everyone else? Of course people will think that their losses are the most significant and urgent. Of course they will want to be first in line for any claims process.
But, I think as a group, we need to have faith in the ability of the authorities to punish those responsible for this fraud and to equitably distribute whatever is left of the company’s assets and possibly clawbacks.
IMO the advice in this forum to pursue individual litigation for your losses against your upline is providing false hope. Very few promoter will be willing to give you back what you lost and those that are willing don’t need a court case to convince them.
Even if you by some chance win a court case against a promoter, you still wont get the money. That person would probably rather file bankruptcy than give you back what they (knowingly or not) defrauded from you.
Just look at Sann Rodriguez. The man is posing in front of Ferrari’s and Lamborghini’s, but when it comes time to pay back, he will fight to the very end. And this is against a slew of government lawyers that have many resources in their hands.
I think that people at the bottom of this pyramid, regardless of what country they are from, are just fooling themselves if they think that they can just sue somebody and get their money back. It will be very hard and IMO not worth the effort.
This website is clearly not the place for legal advice or for final answers on what to do, but there are many people who are coming here looking for a simple answer: how to recoup my loss of principle investment as soon as humanly possible.
And my personal answer to the question is to follow the above advice by Dorothy and wait for the courtroom proceedings to take place and hope for a transparent and equitable distribution of losses.
How can we file a claim and present the proof of evidence to
claim? Our back office was no longer in our websites. Telexfree is making a move now to remove gradually on their sites that could be considered a possible proof of evidence. I think telexfree is misleading us and after all the scenario their sites has been gone.