TelexFree owner shares “investment strategy”
Confusion surrounding TelexFree’s new compensation plan is still abundant, but general consensus among the company’s top affiliates seems to be the adoption of either a three or five position approach.
Affiliates purchase three or five positions within the company (a minimum of one primary plus two secondary positions is required for commission qualification).
Provided enough new positions continue to be purchased by other affiliates (money coming in), TelexFree then pays out $100 a week on the primary position.
The five position approach is near identical, but layers a second primary position under the first, requiring participating affiliates to make a greater initial deposit.
In response to the wider affiliate-base still unable to make heads or tails of the recent changes, TelexFree yesterday published a video titled “A perfect strategy for TelexFree’s marketing plan by Carlos Costa”.
In the video Costa, one of the three owners of TelexFree, sits down with pen and paper and walks them through the aforementioned three-position approach.
Costa himself doesn’t explicitly encourage affiliates to fund the positions themselves. Instead he promises those who adopt this approach will receive ‘a return greater than your own investment‘.
In a refreshingly honest going over of the business, Costa drops the “sell the VOIP to retail customers” facade.
He goes on to lay out a $759.88 ROI if affiliates “follow his strategy”:
Earlier in the video Costa lays out the costs of the strategy:
But he doesn’t take into account TelexFree as a passive investment, which would require an additional $49.90 for positions A and B (required for commission qualification), and then a further $399.20 ($499 – ($49.90 * 2)).
I was led to believe the ten mandatory VOIP positions has been reduced in the latest compensation plan change, but according to what Costa writes down this is not the case (see blue circle in the first screenshot above).
$499 from $759.88 being $260.88 and minus the $19.90 admin fee, leaves an affiliate with a much less attractive $240.88 return on their “investment”.
In the second half of the video, Costa assumes positions “A” and “B” in the second screenshot above will be newly recruited TelexFree affiliate investors.
He then proceeds to run affiliates through what happens if these affiliates each recruit two new affiliates every month over the “12 month contract period”:
Costa calculates that if an affiliate just recruited two affiliates, who recruited two affiliates, who recruited two affiliates etc. for twelve months, that they would receive $83,520 (sans ongoing affiliate fees) via TelexFree’s binary component of the compensation plan:
This strategy seems to involve no retail activity (affiliates buy one VOIP package with their own money), requiring only the recruitment of two affiliates who recruit two affiliates who recruit two affiliates etc.
At exactly 6:30, you can hear him say “ok?”. Following that, his words are:
E você, entrando e colocando duas pessoas que fizeram a mesma coisa que você, você já teve aí, ó, um retorno maior do que o seu próprio investimento. Isso já é fantástico, não é verdade? Então de cara eu já te mostrei que é muito bom participar aqui, da TelexFree.
Which translates to:
And you, by entering and placing two people which did the same thing you did, you already have, then, a return greater than your own investment. That’s fantastic, isn’t it? So, right away, I’ve already shown you it’s very good to be part of TelexFree.
Back in February of last year Gerry Nehra, TelexFree’s “legal compliance” attorney, sent BehindMLM a cease and desist, claiming
The TelexFREE business model in the USA is NOT an investment, uses NO investment language, and pays ONLY on the sale of its VOIP long distance product.
Granted TelexFree’s compensation plan has changed (because the old plan was obviously an investment, despite Nehra’s claims above), whether or not TelexFree management have been informed the new plan is also “not an investment” is unclear.
TelexFree use the same compensation plan in the US as they do globally, so Costa’s investment strategy is workable from anywhere in the world (excluding countries TelexFree is currently banned or suspended in).
Meanwhile if this how an owner of TelexFree is selling the new plan, one can only wonder how the company’s affiliates are going to sell it.
I suspect the only reason the internet hasn’t been flooded with passive investment ads thus far is nobody appears to be crystal clear on the plan itself.
After charging affiliates over $150 to attend compensation plan training a few weeks ago, just two days later the it was revealed the plan had changed again.
Believed to be instigated by angry Brazilian affiliates (who legally aren’t supposed to be participating in the business as the company is prohibited by law from signing up any person(s) residing in Brazil), the specifics of the new plan have yet to be revealed.
At the time of publication the TelexFree website is still showing what is believed to be an outdated compensation plan explanation, dated March 10th.
For now it seems Portuguese-speaking affiliates are the only ones being provided info on the current compensation plan, with everyone else being kept in the dark.
Whether this is by design or unintentional is unclear. With the compensation plan changes having been put through a few weeks ago however and Carlos Costa bending over backwards to keep Brazilian affiliates informed, the former is looking more and more likely.
As for what the rest of TelexFree management are doing then?
The company has been promoting an affiliate investor recruitment drive in Hong Kong on their website. Only it’s not clear whether the event, advertised for March 26th, actually took place.
Patrick Pretty reports,
The website of TelexFree has been promoting a March 26 (today) “conference” at the Kowloonbay International Trade & Exhibition Centre in Hong Kong, with tickets priced at $150.
Whether the event actually took place is unclear. A search of the KITEC website returned no result for TelexFree — on the 26th or any other date.
Whether TelexFree qualified for a listing on KITEC’s events calendar and search index was not immediately clear. It is now March 27 in Hong Kong. The KITEC site showed no March 26 conference events for any sponsor.
With several high-profile Hong Kong based Ponzi schemes either collapsing or entering limbo recently, it only makes sense that TelexFree would head over there to stake out their share of disillusioned investors seeking to recoup their losses.
Stay tuned…
You are clueless and only have bad things to say before you have the facts.
Really? So Carlos Costa doesn’t “have the facts”?
Tell us more!
I guess even hell would seem a good place when described by the devil itself. Costa’s just trying to keep the afilliates calm while TF’s ship is sinking.
Only affiliates on denail mode (most of them by now) will deny that. Not even when straight from the horses mouth.
No escaping from that.
Unless you take into account that in Portuguese often people refer to something you bought as an investiment. Lest say you bought a new car for business. That is an investment.
You bought voip accounts for resale that is an investiment at least in Portuguese that is refered to as investment.
But since Costa is pitching also to US residents the translation may not seem good by SEC.
Sorry, jobusca, but I have to disagree. I am brazilian and after all I’ve known from TF, Carlos Costa could not use the word “investiment” and “return of what you have invested” in any way (specially after all that Labriola’s speech). Even in Portuguese that would give the impression that TF is some sort of investment, which it is NOT. And that’s not just about semantics.
That is one of the reasons that led Acre’s PP to prosecute TF: everyone in Acre was just talking and advertising about “investing money into some company and getting lots of money back”, AKA putting your money in some company that is not a financial institution and should just provide a (non-existent) produt to be sold and make you believe you would profit from sales.
I’m also brazilian and I agree with jobusca. The word investment is used for pretty much anything where you put money with the hope of some sort of benefit. Brazilians say I’m going to invest in a new house, a new car; the even say I’m going to invest in my self when referring to either buying new clothes or getting a new hair cut.
What people are missing out on is the secret message from the video. Whats the reason for calling it a PERFECT strategy? MLM doesn’t need strategy. It needs sales.
He could have titled it THE PROPER WAY TO WORK THE NEW COMP PLAN. But he call it the PERFECT STRATEGY so he can subliminally tell leaders to build their networks in PERFECT BINARY.
I’m a leader on TelexFree, stopped recruiting on March 1st and am now help my people get their money out of there.
Direct explanation of a PYRAMID SCHEME, so yes… TelexFree did change. Whether this is better or worse… well, leopard can’t change its spots.
Oz, Walk through with me with the legality of this new plan:
– If the afiliate buys himself all the 10 Voips AND recruit 2 people who do the same, he WILL have a passive ROI. That is clear.
(ps: in the contract Telexfree was careful to say one cannot buy voips to himself to credentiate oneself for bonuses, but we all know Telexfree WONT reinforce that, like it didnt do with several other masked things on previous contracts; eg: repurchases, etc. The contract is merely to keep regulatory agencies away, but telexfree promotes and operates doing things it does NOT promise in the contract, being able to claim ” we never promised that”, even though they did through their ACTUAL operating way)
– if we consider that to receive the passive ROI, the afiliate MUST recruit 2 more people, than the “company” will always have a positive balance. The person who will lose money will be the last afiliate who didnt find anyone to recruit; but the company wont owe money to him. In other words: ifafiliates stop recruiting, the ccompany” still have a positive balance. The last afiliate does NOT.
– when one reach this unavoidable level, of an afiliate who couldnt find anyone to recruit, the company will say he didnt make money because HE (the afiliate) didnt sell the Voips. Puts the blame on the afiliate being incompetent, and the company gets away with it.
– If Telexfree will always have a positive balance, and the afiliate will be the ine to take the blame for not “selling”, did Telexfree use a loophole in the law? Or is this still ilegal, because if one assumes that to make a small profit one has to sell lots of voips and recruit people, ending the population of the world in a few levels down.
My concern is that telexfree gets away now by saying that the afiliate “doesnt” have to recruit, because he now has the option of of selling a ton of Voips to get his investment back.
Did they finally “legalise” and turned themselves into a “bad opportunity” for pyramid zombies?
I’m so lost right now on what the difference is between the v2 and v2.1 .. are people still making 400 bucks a month for spamming the net???
Has anyone heard of any disgruntled promoters relating to the new planss??
Even if they changed, doesn’t make them a legit program. If you have several affiliates who misrepresent the company, it will go done in FTC/SEC flames. I know I’m preaching to the choir here. 😉
@Silva
The same is true for outside of Brazil. Only in MLM, if you’re going to use the word investment you better be registered with the SEC and you better not be paying existing affiliates with new affiliate money.
@Frontier
One affiliate running multiple positions off the same qualification criteria ruins the mathematics.
You don’t think the top affiliates are going to all of a sudden restrict themselves to one position do you?
Ponzi schemes that require recruitment (let’s say two positions) still collapse.
Eg. Scheme pays out $1500 on a $1000 investment but requires affiliates to recruit at least 2 people. So if everyone is capped at one position that’s $2000 for every $1500 paid out.
Problem is multiple positions are bought which greatly skewers the money in / money out over time. The same is true of TelexFree.
So, in other words, the new plan is still “illegal”, because it allows multiple positions, and will break the company down, no matter if it allows the selling of VOIP or not. Did I understand correctly?
On another note, I thought this video would really interest you and add to this article [41:38]:
On it Carlos Costa makes it clear that the promoters are ” INVESTORS”, not “consumers”! He repeats that to make it clear. This was an attempt by Telexfree to end the law suit in Acre, saying that the Ministerio Publico (prosecutor) only has jurisdiction over “consumers”, not “investors”.
Carlos Costa had several “terms” for promoters according to what he thought was needed to gain to his favor in the law suit. “Investor” was one of them, and he made it clear.
Do not forget, Carlos Costa is not only the owner of Ymapctus. Hi is one of the owners of Telexfree LLC, and Telexfree official videos state on the subtitles that he is the “Marketing Director of Telexfree INternational”.
Even with one position it’s still a Ponzi scheme because they’re just using new affiliate money to pay off existing affiliates. Affiliates purchase positions on the expectation of a >100% ROI, advertised or not – this is seen as an unregistered security.
Adding recruitment qualifiers for sustainability does not alter the core Ponzi mechanic of the model and flow of money.
Costa’s video is pretty much a 17 min passive investment / unregistered security guide to TelexFree (put $x in, get >$x out) – I imagine the SEC will have a field day with it.
That’s why him referring to affiliates as investors and providing “investment strategies” guides is of such importance. It totally destroys the “we are selling VOIP facade” the rest of the company is pushing.
Costa is ironically the most honest person they have in corporate. Sadly after his latest video I suspect he’s going to be muzzled.
Hi Oz,
I am the analyst from the Dominican Republic that has written to you before.
Did you see that Telex is also seeking some sort of authorization in TN? Check out their request: http://www.tn.gov/tra/orders/2014/1400032.pdf
What I found interesting were Wanzelers and Merrill’s CVs.
Prior to TelexFree, Merrill appears to have run a cleaning/janitorial micro business in MA which now has the same address as TelexFree: “Cleaner Image Associates” http://www.ciajanitorial.com or http://corp.sec.state.ma.us/CorpWeb/CorpSearch/CorpSummary.aspx?FEIN=043109742&SEARCH_TYPE=1
That, of course, is not told in his TelexFree bio (http://www.telexfree.com/jimmerrill).
He also lies in that bio as to graduating from Westfield State University. To the TN authorities he just says that he did 2 years and then “moved in another directions”.
I have got to hand it to this guy Merrill: from running a small janitorial microbusiness in Ashland, MA to setting up a global HYIP scheme of hundreds of millions of dollars is, honestly, close to unbelievable.
In his own words, he quite definitely has “the ability to motivate others and instill trust in a company”.
He sure as hell does!
Regards, A.
@Alejandro
Paul Burks was entertaining old people with magic before he went on to launch one of the biggest Ponzi schemes in US history.
It’s always the quiet ones…
Oz, This is what Carlos Costa says in that video, and the translation. I hope it helps and be a nice addition to your article, if you chose to do so:
English:
(feel free to edit or merge this comment into my other comment if you prefer)
Thanks for the translation Frontier, I think leaving it as a comment will suffice. I’ll note it to use as a previous example if Costa puts out any new investment videos.
Oz, could you elaborate a bit more on the “multiple position” calculation? I was doing my maths here and couldn’t find a situation where the company would have a negative balance with the “Mandatory recruitment” . The thing is that if one leader has multiple positions, the bonus he’s gonna get are still paid by the ones he recruited.
I believe the “illegality” is still in the fact that the money used to pay new afiliates comes subscriptions of old ones. And that will break the last afiliates eventually. Even if he could “sell” to make it up, the company offers a way out if he recruits… That’s whats illegal.
Company would never be negative, as it is paying out AFTER people paid in.
So.. this is just a matter of morality then.. since we can actually see that TF is self sustainable in theory.
As long as their own affiliates keep “consuming” their VOIP (as a means to get able to profit from the company) telexfree will be in good stand and all our chitty chat would rely on nothing more than “morality” despite the fact people will still be making lots of money as long as they play by their rules..
I mean if they can make their affiliates buy the VOIP service, and they have money for doing so, how can we say the company is illegal.. if the whole premise of money making is selling a product, let it be to 3rd parties or your own affiliates.. it doesnt matter…
They wouldn’t be in good stand… The entire thing is still illegal and the bottom tier will continue to grow and put more people at risk.
It is best to close a scam like this as early as possible so less of that bottom tier lose out by their own collapse or govt shutting them down.
Random example:
$100 position, $150 ROI and a 2 affiliate recruitment requirement.
I put in $5000, company owes me $7500 and my 2 affiliates only purchase a $100 position.
Worst case scenario they need to bring in 25 new affiliates for the company to break even on my investment. Follow this down a few levels of recruitment, even with mildly favourable position purchasing habits and the whole things becomes a basket-case of paper-thin fragility.
Oh and my $7500 is re-invested and now the company owes me $11,250. TF is what, a year? Slow-motion collapse but add up all those phantom $1000s and it’s still game over sooner or later.
On the other hand I used a 150% ROI, I CBF working out what TelexFree’s 52 week ROI is but I believe it’s higher.
And ok, let’s restrict everyone to one position and enforce mandatory recruitment quotas.
What do you think will happen when the bottom can’t find any new suckers? The scheme collapses and those at the top pull out their money.
It’s unsustainable any way you look at it. And let’s not forget recruitment quotas for commission payouts is automatic pyramid scheme territory.
Hey Oz, another Carlos Costa’s vídeo:
That’s a long one.
He spends the first 10 minutes talking about how Acre’s PP is the devil and TF’s is good, a “God’s company” and how wrong everyone else is… zzzz…
After that he goes again saying that brazilian IRS confirms they are “A-OK” and that they would not charge you any taxes if you’re legal… He goes again saying the ovbious and saying TF’s does amazing things like providing online accounting records (that every company in Brazil must do)…
He goes again sayin that IRS audit is more than enough to prove they are legal again. After that, he says he’s proud of being fined, this time, another R$ 20,544.28 and another R$ 16,929,801.19 and another R$ 81,991,112.78 (that if paid within 30 days, IRS will give you a “discount” of 50%). He also claims that they were fined within the “regular fine category of 75%”, which again proves the company is completely legal… zzzz…
Continuing, he shows another site called “transparenciaympactus.com” from which the affiliates may download a form to request their money back… Funny enough, it seems they are trying again to play the card “we have no access to TF’s database”, since people must fill in how much credit they would have. The form has a foot note that says they will verify the amount informed and, if correct, provide new details through e-mail (one can only imagine this is another “wait another turn” card).
He goes again saying they are fighting to give the money back to people, and how God is good and blah blah blah… and how the media is bad and blah blah blah… and how that website will tell the truth… and blah blah zzzz…
Finally, he talks about E&Y audit, and how Acre’s government is denying paying for the audit and that (hold on to your chairs) TF’s will now PAY the audit because they are not afraid of any audit (again talking about God and blah blah blah).
Isn’t there something even fishier there? He say’s he will pay using the blocked money (which I do not thing Acre’s PP will allow).
So, first the justice say TF should pay for the audit, they say “no no”, justice says government should pay and now TF’s wants to pay for it? Let’s talk about being confuse(ing)…
So my theories are:
1 – They’ve find a loopwhole somewhere
2 – They’ve find a way to bribe the auditors
3 – They’re REALLY convinced IRS has proven their legality
4 – They know this is going nowhere and are just trying to act cool
Or they have just figured out that things would come this way, since they are paying millions of dollars in fines and are just anticipating the obvious justice’s conclusion: TF has ways to pay for the audit and should not have complained at first.
Place your bets.
The IRS don’t establish the legality of a company, they only investigated TelexFree’s tax activities (and fined them repeatedly for tax fraud).
Hell, the Acre’s Public Ministry just put out a press-release two days ago addressing misleading crap like this coming from TelexFree’s affiliates:
The issue of TelexFree being a Ponzi scheme is only being addressed in the Acre Public Prosecutor’s case against TelexFree, not by the IRS or anywhere else.
I think somebody over there must have been friends with Manoj Kumar. This is Speak Asia all over again.
Oh and TelexFree already tried this crap, it didn’t work.
As for offering to pay for the audit, whether our article had anything to do with it I can’t say but I think they realized the idiocy of arguing they can’t pay R$500,000 when they’re hemorrhaging affiliate investor money from the rest of the world to pay millions in tax fines.
Bribe or no bribe I can’t see any legit auditor giving them a free pass. One need only look at the mess they’ve made of their taxes to gauge the orderliness of TelexFree’s inhouse accounting. They’re going to be crucified by an independent third-party auditor (no pun intended).
That was the first thing that crossed my mind: some TF’s affiliate warned CC about the possibility you have published (since CC’s bragging at some part of the video about how good it is they have “eyes” all over the internet in the form of affliates).
I have two hipoteses for Carlos Costa now wants so desesperatly pay the audition and give the money back:
– He might know it will be denied to use the blocked money for it, since its reserved to the people who lost money;
or
– He knows it’s a lost cause and wants to play nice, gain trust from afiliates, give back some of the money, and have them re-invest in the Telexfree USA.This is because with the comp plan changes no one wants to join Telexfree no more… And he needs fresh blood!
Just (another) funny thing about CC’s latest video: he says that on “transparenciaympactus.com” they are showing ALL cases judged in favor of TF/Ympactus that the media refuses to publish.
Well… guess what: they have just only ONE case (of a guy complaining that he left his job in hope of receiving TF’s ROI) that some judge saw as unfounded and denied it, favoring TF.
All that noise for one case in favor vs dozens against TF? Really CC?
What he’s deliberately failing to point out is if TelexFree don’t pay their taxes it creates TWO offences:
1) Non payment of tax
2) Running a pyramid / ponzi scheme
Prostitution is illegal in many jurisdictions, but the tax department doesn’t give a damn how the money is earned, as long as any taxes are paid.
They leave legal arguments up to others.
That concept is called “pecunia non olet” in Latin, meaning “money has no smell”. It indicates that the value of money is not tainted by its origins
well TELEXFREE did change the plan however they also added more services as it was TELEXAPP which is an application to talk with other people as long as they have the TELEXAPP.
also the carry the MY FINANCIAL ADVANTAGE which helps people to pay their debts faster also helps to improve their FICO SCORE as well as provide some kind of financial counseling and pretty soon they will have MOBILPHONE SERVICE those services ( VOIP AND MY FINANCIAL ADVANTAGE ) count as purchases within the 5 monthly purchases.
once TELEXMOBIL comes into the markets it will take part into the monthly required purchases which in my opinion that will dramatically change the whole program.
and also ain’t the same with almost any MULTILEVEL MARKETING PROGRAM that you have to spend money to buy product so yo can sell it and recoup your money, however many people outhere refer to any money spent and recovered as ” I NEED TO INVEST THIS MUCH TO GET THIS MUCH ” IS real unfortunate.
that this company has broken the MLM STEREOTYPE which has been causing lot of uproar as well as lots of the media attention also if you were to check the ALEXA REPORT since it has climbed to be on 647 position which it continue to get more attention. it will be in the top 500 aslo taking more attention from the Webb.
well I believe that you all should do a little more research into the latest products and how it will help or affect the compensation plan which apparently they are working ( TELEXFREE ) to keep everything legal.
With thousands of people investing thousands of dollars in AdCentral positions, why do you think that was?
The products you mention have nothing to do with $100 a week ROIs. Affiliates will mostly ignore them. MFA popped up on the scene what, four or five months ago? TF aren’t the first company to package third-party offerings to smoke and mirror their core investment model.
TelexAPP? Yeah… they’re a few years late to that party. The only people who will switch over to a clone VOIP app are those with a vested financial interest. Everybody else will just keep using what they’re already using (primarily because it’s cheaper).
You make it sound like running a Ponzi scheme is something new and never been seen before. Probably want to put down the koolaid son.
Keep? There’s nothing legal about accepting $299 investments from affiliates and using the funds to pay out existing investors.
All they’re doing now is trying to keep the SEC from shutting them down. This typically hasn’t worked well in the past for other “we were a Ponzi scheme but we’re not any more” schemes.
the TELEXFREE APP is only .99 ( cents ) from the app store and it allows you to talk to other users for free you need to take a look at it , it also allows you to talk to another country as long as they have the app and a smart phone
And how many free apps are there that do the same? You do realise VOIP apps are nothing new right?
And Skype is FREE, as are VIBER, Bolt, Google Hangout, Line, Krinq, KakaoTalk…
So why would you use an app cost money when there are MUCH BETTER KNOWN apps for free? Are you made of money that you’re willing to give money away?
It’s also funny there are are 20+ apps related to TelexFree… TelexApp isn’t even the first app on the list.
Browsing the app’s manifest shows that it even lets you post AdCentral ads through a couple websites in Brazil. Hahaha.
The app’s developed by DCCSoft, who is online as “Telex Mobile” on Facebook. This explains the existence of “Telex Mobile Inc” registration recently (See PatricPretty.com)
Head of Telex Mobile in Brasil is Douglas Cavalheiro Chiodi
https://tapfame.com/douglas-chiodi/
Which linked me to a TelexFree distributor association (yep, AISPA’s equivalent in Brazil) called UNITEL
DCCSoft has two other apps that helps TelexFree associates to post ads and whatnot, a LITE and a full version. This TelexApp is basically the “full” version plus actual access to TelexFree’s VOIP servers… Maybe.
Any TelexFree affiliates care to TRY the TelexApp and see if the messaging actually works? I looked through the app manifest and I don’t see stuff that actually makes communications with the TelexFree servers, but then I’m merely an amateur in Android app programming. All I see are reading TelexFree announcements and posting AdCentral ads.
Well , the only way to cash now is thought ewallet.and its not working.
We are still making money up to the end. You will be here talking up to the end
@TelexFree
Numbers on a screen != money.
@Telexfree
Yes, we will be talking up to Telexfree’s end and probably for some years after since the legal piece will take years to sort out and setttle. And like others who recently have wised up and come here now asking for advice about lawyers, how to proceed with law suits in getting thier money back, you to will come to the day that you find yourself screwed by Telexfree.
Even after you collect your money and are sitting on the beach this summer, beware of the list that your name may apear on saying your one of the people that have to pay all the fun money you spent back. Hope you invested that money wisely so that you will have assets you can liquidate to make things right.
Best of luck to you, at some point in the near future you may not find yourself so Telexfreeeeeeeeeee. As we know, nothing in life is for freeeeeeee.