telexfree-logoYesterday saw dramatic scenes unfold at TelexFree’s Massachusetts’ head office, culminating in police being called to the scene to remove the company’s affiliates from the building.

What we weren’t sure on at the time was who called the police.

Luckily local Boston media were on location, with Wicked Local’s Daily News Staff reporting it was Steve Labriola himself who called the police on the affiliates.

Labriola said he called the police to intervene Tuesday when the crowd began to grow outside the company’s offices.

When asked if he might help affiliates get some answers by requesting management talk to affiliates, a Boston police officer who responded to Labriola’s call for help later told affiliates:

None of them are gunna come out man, they’re staying in there. They see this many people, they’re scared.

Affiliates gathered at TelexFree office to demand why the company, literally overnight, had made changes to their AdCentral investment positions.

Previously affiliates had been told there would be no change to their existing positions, with many expecting to be paid out their weekly $20 a week ROI per position for the remainder of the maturity period (52 weeks).

Short of trying to re-invent themselves as a “customer acquisition company”, TelexFree have thus far failed to explain the reason behind the changes.

In an interview with Wicked Local (TelexFree management weren’t scared of them), Steve Labriola gave a reporter an update on the current SEC investigation into the company,

Labriola claimed executives from the company met with state officials last week to discuss TelexFREE’s business model.

“I think the outcome of that day was pretty successful, but we’ll have to see how it lands,” he said.

Reading between the lines, it would appear obvious that these latest changes are a direct result of that meeting. TelexFree did hint as much when they cited “regulatory requirements” as the reason for the change. However until Labriola spoke to Wicked Local, no specifics had been revealed.

Reading between the lines, I’d guess that the recent change was to prevent TelexFree from paying out on existing AdCentral positions going forward – at least not without any retail activity taking place. With affiliates able to self-fund the $249 a month fund withdrawal qualification however, it appears that even with the recent changes retail activity will be unlikely.

Exactly how unlikely?

Speaking to Wicked Local, one TelexFree affiliate spelled out the problem thousands of them are now facing:

One associate, who declined to give his name, said most people who have signed up with TelexFREE have been making money by posting ads for the company, not by selling its products.

People become promoters by paying an entry fee – the company used to charge as much as $1,375 for a “family kit” but now has a single rate of $149. Some have as much as $10,000 invested, the associate said, which they now cannot access unless they start to either sell the phone service or buy it themselves.

“It’s almost impossible to sell,” he said.

Labriola might be heavily pushing this new artificial notion that TelexFree has been about VOIP customers, but it seems that their affiliates (who signed up for passive AdCentral ROIs) aren’t buying it.

Meanwhile, when asked about the current status of the SEC investigation into TelexFree,

Brian McNiff, a spokesman for Secretary William Galvin’s office, on Tuesday said the state’s investigation is ongoing.

Steve Labriola certainly sounds optimistic about the investigation, but then keep in mind this is the same guy who in January told affiliates that “there is no investigation started or presented to TelexFree in any shape or form“.

Stay tuned…