TelexFree insiders try to cut prelim injunction deals
Now that TelexFree’s bankruptcy proceedings are all but dead, attention has shifted onto pending and ongoing regulatory action in the state of Massachusetts.
Charged with being a Ponzi and pyramid scheme by the SEC and Massachusetts Securities Division, TelexFree are now staring down the barrel of a permanent injunction. But whilst the company and key management blindly put their faith in the now-squashed Nevada bankruptcy, other insiders have been wheeling and dealing with the SEC.
Carlos Wanzeler (owner)
Carlos Wanzeler’s lawyers did enter into discussions with the SEC regarding possible pre-injunction settlement, however those negotiations have broken down.
I imagine they went something like this:
Wanzeler’s Lawyer: “Wanzeler in innocent. We demand you retract any and all litigation, issue a press-release stating TelexFree and my client is clear of all charges, and erect a taxpayer-funded monument in front of the District Courthouse in honor of Wanzeler’s ongoing commitment to legitimate business. A plaque inscribed with “Carlos Wanzeler – Changing Lives…” under said monument shall suffice.”
SEC: “No.”
Wanzeler is opposing the granting of a preliminary injunction, arguing that after TelexFree’s offices (April 15th) and Wanzeler’s house (April 17th) was raided, he doesn’t have access to the information the TRO requires him to provide to the SEC.
Wanzeler’s response was filed immediately after TelexFree lost the bankruptcy case, prior to which he was simply wasting time on the belief the bankruptcy proceeding would absolve him of all regulatory liability. As such he’s asking for delay on the preliminary injunction decision until June 13th.
Amusingly, Wanzeler is also claiming that the granting of a preliminary injunction violates his fifth amendment right:
Paragraph IV of the SEC’s proposed order should be rejected because it would require Mr. Wanzeler to engage in testimonial conduct, which is prohibited by the Fifth Amendment.
For those unfamiliar with the Fifth:
The Amendment requires that felonies be tried only upon indictment by a grand jury.
The Amendment also provides several trial protections, including the right against self-incrimination (held to also apply to custodial interrogations and before most government bodies).
Basically Wanzeler is protesting that his testimonial regarding his involvement in the running of the $1 billion dollar TelexFree Ponzi scheme would incriminate him.
As it were, the bankruptcy court isn’t the only judicial tenant Wanzeler is willing to try to abuse to try to get out of the mess he now finds himself in.
“Sorry Judge. Can’t talk about my Ponzi scheme business because that would be incriminating”.
“Ah ok then. No worries, you’re free to go. Case dismissed!”
Right.
Joseph Craft (CFO)
Up until the morning of May 6th, Joe Craft’s attorneys were in negotiations with the SEC. That morning however, negotiations ‘broke down and, surprisingly, could not be resurrected‘.
Despite Craft being involved in the TelexFree from the beginning (2012), setting up numerous offshoot companies to launder money through and serving as Chief Financial Officer, his attorney’s demanded that the SEC acknowledge his alleged innocence.
The disagreement focused on whether or not Mr. Craft would sit back while an Order was entered which said in effect that there was a likelihood that he had participated in wrongdoing and issues relating to the continuation of his legitimate accounting practice.
Mr. Craft does not concede that there is likely that it will be proven that he violated the Securities laws of the United States.
There are out-of-state witnesses who can provide evidence to demonstrate that Mr. Craft’s activities in connection with TelexFree were lawful.
Craft has asked that the current TRO against him remain in place, with a decision on a preliminary injunction being held off until a hearing is held in which Craft hopes to prove his innocence.
Dude in charge of $1 billion Ponzi scheme’s finances had nothing to do with the running of said Ponzi scheme? That’ll be a blast of a hearing if granted.
Hindsight is of course 20/20, but Craft probably should have considered his “legitimate accounting practice” before he jumped on the TelexFree Ponzi gravy-train.
TelexFree, James Merrill (owner), Steve Labriola (International Marketing Director), Sannderly Rodrigues (top promoter, possible insider), Faith Sloan (top promoter)
The SEC filed proposed preliminary injunctions for the above defendants read much the same as the current TROs in place against them. Some parties are permitted to make a single $6000 withdrawal (likely for living expenses) from the SEC-controlled seized asset account.
Santiago De La Rosa (top promoter)
Having already had a preliminary injunction against him granted, Santiago De La Rosa (right, photo right) appears to be playing ball with the SEC. A “memorandum of lis pendens” filed by the SEC on May 7th identifies a Massachusetts property De La Rosa owns, that ‘may be used to satisfy any judgement obtained by the (SEC)’.
Additionally, De La Rosa has
- surrendered all available funds in the US under his control to the SEC
- sold his 2013 “Land Rover Range Rover Sport HSE” back to the dealership he bought if from for $1773 (seems a bit low?)
- is continuing to try to either sell or surrender his BMW back to the dealership it was purchased from
- has begun the process of repatriating all funds under his control outside of the US
De La Rosa’s international stash of funds appears to be in the Dominican Republic, as he advises he ‘went to the Boston Office of the Consulate for the Dominican Republic, in order to fill out the necessary paperwork‘ to begin the repatriation of his offshore funds.
Randy Crosby (top promoter)
As with De La Rosa, Crosby (left, above) also had a preliminary injunction entered against him on May 1st.
On May 7th he filed a declaration advising that he has ‘deposited all available funds under (his) control or disposal‘, into a bank account under SEC control.
No mention is made of offshore funds, with Crosby presumably keeping all of his TelexFree winnings in the US.
Looking forward
At the time of publication, there is no word on as to the status of negotiations, if any, between Faith Sloan, Sann Rodrigues and the SEC. At this stage, both seem defiant to fight the SEC in court.
Stay tuned for an update when the order of the May 7th preliminary injunction hearing surfaces…
In related news Carlos Vanderpool, TelexFree’s top Dominican Republic Ponzi pimp, has fled to the US following the issuing of an arrest warrant by local authorities.
(Vanderpool) said he was very sorry for what happened, stating his intention to (recruit people into TelexFree) was not (to) cheat or harm anyone, but to give them benefits.
Purportedly fearing for his life, Vanderpool claims he’ll return to the Dominican Republic to face authorities as soon as his lawyer “advises him to do so” (riiiiiiiiiiiiiiight).
There have been additional reports suggesting that several local TelexFree affiliates have committed suicide following the effective shutdown of the scheme. Some of those alleged to have taken their own lives are likely to be victims of Vanderpool’s investor recruitment efforts.
Gosh… That guy really loves to lie. That’s the same BS he told Brazilian justice, when asked to provide the list of Ympactus/TF clients: “I do not have access to that information”.
Days later, he was fined by justice for lying, as it was inconceivable that a business owner claimed he did not had access to his company data.
Shame on that guy… what a scammer.
ONE ALREADY ESCAPED JUSTICE…
http://www.bostonglobe.com/business/2014/05/07/one-telexfree-owner-appears-have-left-while-grand-jury-investigation-continues/kZo2XxKLO1UrNAjIZlrr7N/story.html
THAT IS problem is so is this…from the link above:
“There would have been nothing to stop co-owner Carlos Wanzeler from leaving the United States, as no criminal charges have been brought against him or anyone else involved with the company.”
There’s only one reason Wanzeler would flee the US amid an SEC investigation and issuing of US Attorney’s Office forfeiture notices.
Time to expedite the conclusion of this farce and close what has been one of the more disgraceful chapters of MLM history.
It’s worth between 54K and 67K depending on condition and exact trim. I can see dealer taking it back for 35K or even 30, but 17K? Sounds low.
Surely that is a misprint.
One thousand seven hundred and seventy three dollars for a Land Rover – I’ll take two, please
Well that’s what the declaration says. There’s even cents after the dollars.
Probably net value.
“Proceeds” not market value.
Financed
Wanzeler’s Fifth Amendment play may not be all that dumb with regards to delay tactics. He could conceivably hold up further action (against him) while appealing on that one issue alone.
And that is his right.
As much as victims want instant action and no delays, that simply ain’t gonna happen, IM(very)HO.
Once it’s been accepted this is a multi billion dollar fraud, all the delays and delaying tactics in the world aren’t going to make the slightest difference to the outcome, only how long it takes to reach that outcome.
Based on watching these things over an extended period, and recognizing the landscape has changed since the formation of the Financial Fraud Enforcement Task Force (FFETF) I still wouldn’t be surprised to see this taking up to four years until final resolution and, even then, don’t think everyone will be happy with the outcome, especially some of the victims who appear to have lost “everything”
Wanzeler and Sann Rodrigues certainly will flee to Brazil. Brazil can not extradite Brazilian citizens.
SEC attempts to put both processes under the same court.
Baxter v. Palmigiano, 425 U.S. 308 (1976). It is constitutionally permissible to draw an adverse inference from a party’s invocation of the Fifth Amendment in a non-criminal proceeding.
See, SEC v. Colello, 139 F.3d 674, 677-78 (9th Cir. 1998) (proper to shift summary judgment burden to a defendant who claimed Fifth Amendment privilege and
refused to testify in a civil SEC proceeding).
Hoss I’ve been meaning to ask (and apologies if we’ve already had this conversation before), but are you a lawyer?
I noticed the mention of “we” a few posts back in relation to some cases and it sounded like you were talking about a lawfirm 🙂
Just general curiosity, there’s nothing behind the question mind.
The above concerns CIVIL precedent. The bit about shifting “summary judgment burden” to the defendant means that defendant Wanzeler must prove the SEC allegations are false. That’s obviously tough to do if he won’t open his mouth.
Invoking the 5th in the civil case all but concedes the field to the plaintiff SEC. It also implies Wanzeler is more concerned with avoiding criminal liability than vigorously defending his business model.
No, but I was on the unsecured creditor committee in a large bankruptcy-civil complaint-Rico suit out of Las Vegas. I suppose I carefully read over 4000 filings over the course of events and became familiar with the landscape.
Cool. We really do get allsorts around here :).
Happened in the AdSurfDaily case which, like TelexFree, had parallel civil and criminal investigations. In the ASD case, it triggered perhaps the all-time greatest HYIP denial of reality. (Also known as ham-handed MLM chicanery or “positive thinking.”)
When Bowdoin informed the court he’d be asserting his 5th Amendment right at a civil proceeding, the troops spun the story he was “too honest to testify.”
Bowdoin also tried to BS members into believing he was fighting for their money. But he told a federal judge the cash belonged to him.
One of the most memorable days of the ASD case was when the Secret Service presented the judge a transcript of a post-seizure webinar in which Bowdoin was bullshitting the troops.
Among other things, Bowdoin claimed that his continued court fight was motivated by the life experience of a former Miss America who was denied the crown four or five times before finally winning the stroll down the Atlantic City runway with all the flashbulbs popping and millions of adoring fans watching on TV.
In short, if Miss America never gave up, neither would Andy Bowdoin! Like Miss America, Andy Bowdoin would get a flashbulb-popping stroll in front of an adoring American TV audience!
Bowdoin’s early jailing two months before his ASD sentencing — and this is something the HYIP serial scammers have turned a blind eye to — was NOT a direct result of ASD. Rather, it was a result of the AdViewGlobal reload scheme (Bowdoin was a silent partner) and the OneX pyramid scheme.
Yes. Bowdoin continued to promote fraud schemes, even AFTER the government seized $80 million in the ASD case, even AFTER the government opened litigation against ASD on at least three fronts, even AFTER he was sued under the RICO statute by his own members and even AFTER a grand jury returned a criminal indictment against him.
TelexFree members need to know this history. If they ignore it, they invite the Faith Sloan and Randy Crosby treatments — i.e., get sued and pursued.
PPBlog
Anyone know what time the preliminary injunction hearing is today in Mass?
@More
It was on Wednesday the 7th at 3:30pm.
I’m not entirely sure what it means, but the order handed down is as follows:
I think that means another order deciding on the preliminary injunctions will be passed on or before Saturday May 10th (after the Judge has gone over the submitted proposed orders).
Sloan and Rodrigues’ names are absent from the above order, so there might be another decision published later today that hasn’t been filed yet.
So is TF going to apply for Chapter 11 in MA ? What happens with that now ?
The case will probably be transferred “as it is”, as a valid Chapter 11 bankruptcy case in its initial stages. The rest will be up to the MA bankruptcy court to decide.
First TF lawyers will fight SEC’s attempt to transfer the venue from Worcestor to Boston
Then TF lawyers will fight how much of the TRO conflicts or not conflict with bankruptcy’s automatic stay
THEN we get a ruling on can bankruptcy continue or will be invalidated (rejected) as a fradulent bankruptcy
THEN we get to see SEC bring their full weight on TF in a real Federal district court. 🙂
Assuming it’s either leased or financed, that *could* be what’s left of his equity.
And I *hate* to say this, but there were PLENTY of promoters who insist that because US government hadn’t taken action on the scam, it must NOT be a scam.
Not that the government *has* acted, it’s “they don’t move fast enough”. Heck, even a newspaper editorial said this already.
I take it a few familiar folks will be pleading the fifth.
Sorry if I threw up too many “F’s” there.
Oz, are you there?
No news of the injuction hearing that was held yesterday?
Here’s a new document from the Massachusetts Bankrupcy court:
http://www.mab.uscourts.gov/pdfdocuments/Telexfree/14-40987msh.pdf
1. New case number:
14-40987-MSH (lead case), 14-40988-MSH, 14-40989-MSH
2. Emergency pleadings, how to file.
3. Kurtzman Carson Consultants will continue as claims processing agent until further order by the court.
4. Status conference May 27 2014 2:00 pm in court room 3, Donohue Federal Building, 595 Main Street, Worcester, MA.
There’s 14 documents posted 15 minutes ago (doc-76 to doc-89).
https://sites.google.com/a/asdupdates.com/files-website/sec-v-telexfree-inc
A Carlos Vanderpool want him lynched here in Dominican Republic by crook, he does not know the damage that and this whole group of scammers have done to my people.
Deceived many people, 150,000 Dominicans lost their money by these damn, I hope that rot in jail or kill them all …
In the link below, they are asking for promoters to write a letter to The BK Judge in support to Telexfre:
(Ozedit: pointless TelexFree affiliate spam removed)
Yeah I’ve seen that doing the rounds. Some idiots in Brazil seem to have confused the preliminary injunction hearing with the bankruptcy proceeding. Next bankruptcy proceeding is in late May (28th?) IIRC.
Writing letters to the Judge is a waste of time. Any decisions will be made based on evidence, not sob stories from affiliates about TelexFree changing lives.