Gerry Nehra fails basic TelexFree due diligence?
Last Saturday night I received an out-of-the-blue email from attorney and well-known MLM figure Gerry Nehra.
Somewhat cryptic in nature, Nehra’s email simply stated:
I wish to talk to and email with a person or persons controlling this web site about a recent posting. I am an Attorney specializing in the direct selling industry.
Sending off what I thought would have been obvious given the above email was sent via BehindMLM’s “contact” form, I replied:
I’d be that person, fire away.
I didn’t hear anything back on Sunday but yesterday morning Nehra replied, giving me a clearer picture of what it was he wanted to discuss.
A reply that left me scratching my head and wondering just how much due diligence MLM lawyers actually put into the clients they choose to represent.
Here’s what Nehra sent me:
I represent TelexFREE in the USA. I am not bi-lingual, and I do not represent, or comment on, TelexFREE operations outside the USA.
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.
Any representative who uses investment language to describe the TelexFREE business model is violating policy, and if reported to the company, will be counseled and disciplined, up to and including termination.
We respectfully request you retract statements to the contrary.
Gerald Nehra, Attorney at Law
MLM Specialist Counsel to TelexFREE in the USA
Upon receiving Nehra’s request, I figured he’d read the BehindMLM review of Telexfree and, with TelexFree presumably not offering the whole AdCentral investment scheme in the US, wanted me to amend the review to indicate it wasn’t offered in the US.
Figuring if this was the case that TelexFree deserved a separate review if it was indeed using a different model in the US, I headed over to their website only to see this:
I’ve had to shrink the above screenshot to fit on the page but the circled text on the bottom left of the page reads:
Be our promoter
Earn money doing announcements on Internet!
Through a ADCENTRAL, that you geot (sic) for the amount of US$299 (annually), the promoter will receive US$20 each week.
I tried looking for a separate TelexFree USA website but found none. The above page features a US flag, indicating that it is the website for TelexFree USA.
Indeed, elsewhere on the same website TelexFree heavily promote the recent acquisition of Nehra by the company:
Telexfree claim to have Nehra and his firm Nehra & Waak “on retainer” to “protect its legal interests”.
With Nehra claiming in his email that he “represents TelexFree in the USA”, obviously this is the website of TelexFree USA.
As per the “AdCentral” marketing copy on the TelexFree USA website above, affiliates pay the company $299 and in return are guaranteed a $20 a week ROI.
As per the TelexFree USA FAQ, affiliates can purchase up to four additional AdCentral positions (referred to as a “family”) for a total of $1156, with each position paying the guaranteed weekly $20 ROI:
18 – How to Become a Family?
There are two situations:
a) Being a Partner ($ 50 is paid Accession) must first acquire a adcentral by clicking the link UP-GRADE, which is inside your virtual office, buying an additional (paid U $ 289.00). And only after its activation may buy 4 more additional (U $ 289 X 4 = U.S. $ 1,156) and thus become a Family.
B) Being a adcentral (U $ 299.00 is paid Accession) must purchase their additional 4, by clicking the link UP-GRADE that is within your virtual office, paying $ 1,156 U
In order to qualify for their weekly ROI affiliates must place advertisements on the internet, including the advertisement of the TelexFree income opportunity itself.
As such, what you have are TelexFree affiliates paying the company hundreds of dollars to advertise for them, in exchange for a weekly $20 ROI.
Where does this ROI money come from?
Newly recruited affiliates who also pay TelexFree hundreds of dollars to advertise for them.
In light of this, I realised there wasn’t any point to writing a separate TelexFree USA review (as per their website it’s the same company with the same business model), and emailed Nehra back the following reply:
Taken from the TelexFree website, which uses an American flag so I can only assume is “Telexfree USA”:
(I placed a screenshot of the TelexFree USA website with investment and weekly $20 ROI marketing copy as above here)
Please don’t waste my time Gerry. The company appears to use the same business model across all markets (according to their website) and the Telexfree review on BehindMLM was written before Telexfree USA even existed. If you’d bothered to read it you would clearly see it decribes (sic) the Brazillian company.
You pay them $299 and earn $20 a week, paid out of newly invested $299 money by affiliates. Whatever long-distance VOIP product they have attached this scheme to is irrelevant.
I suggest you better research the company’s (sic) you choose to represent.
That was Monday morning roughly fifteen minutes after I received Nehra’s second reply and I haven’t heard anything back since.
What amazes me is this isn’t the first time Nehra’s been caught up representing what was obviously a blatant Ponzi scheme. Hell it’s not even the second.
Nehra once filed an affidavit in court declaring that Ad Surf Daily “was not a Ponzi scheme”. Ad Surf Daily was shut down in 2008 for being an illegal Ponzi investment scheme and its founder, Andy Bowdoin, confessed as much in mid 2012.
In late 2011 Paul Burks, founder and CEO of Zeek Rewards, held a secret meeting with early investors and informed them that Nehra was on retainer and had “taken the Zeek Rewards system apart”, making recommendations to change the terminology used by the company and its affiliates to describe the income opportunity.
Burks even went so far as to reassure the early investors that ‘generally when Gerry Nehra is involved, the Feds know that he’s cleaned up the act really well‘.
In August 2012 the SEC shut down Zeek Rewards for being an illegal $600M Ponzi investment scheme.
Meanwhile TelexFree appears to already be under regulatory scrutiny back in Brazil, where the company first originated. Just a month ago the Brazilian Consumer Protection Authority (Procon) issued a press release advising they had analysed TelexFree and ‘detected evidence of crimes‘.
In light of their analysis and discovery, Procon ‘lodged a complaint against Telexfree and forwarded it to the State Prosecutors Office, the Minister of Finance and the Federal Police‘.
But of course rather conveniently, Gerry Nehra does ‘not represent, or comment on, TelexFREE operations outside the USA‘.
Looking at Nehra’s emails, his involvement with TelexFree and their business model…
Here we go again?
Maybe we should see what Troy Dooly have to say about this. I heard that he and “Gerry” are old buddies. 🙂
His client will of course be allowed to make corrections, e.g. “People are purchasing AdCentrals as PRODUCTS, just to have them on their computers, to look at them, play with them and have fun with them.
They’re NOT investments. There’s actually a big retail market for AdCentrals all over the World, and they will probably replace Television as the main ‘entertainment central’ in most homes within few years”. 🙂
His client can also try this argument:
“People are actually paid for the WORK they’re doing, $2.85 per daily ad posted on the internet, $20 per week per AdCentral. When there’s some WORK involved, then it can’t be an investment.
Investments are about handling your money over to a company and expecting a passive income in return, let THEM handle the money for you”.
I used “his client”, because the email indicates he’s only representing other parts of the business, not the “very similar to Ponzi scheme” parts.
Technically the USA flag would indicate only the language used (as using a UK flag looks rather odd)
Oz found a picture of Nehra there, too. It didn’t exactly show the “600 pounds” mentioned in another thread, but that was probably a figurative description.
It’s just too sad that suspicious schemes have to trot out lawyers to imply their compliance with the law, rather than being obvious that they can’t be violating the law.
And who says lawyers prove anything legal? Don’t forget Andy Bowdoin and his first lawyer testimonial… He got a lawyer (not Nehra) to appear with him on video explaining that his Ponzi scheme is perfectly legal. Then when he’s shut down he got Nehra to say the same thing in court.
What a bunch of poppycock.
But there’s no TelexFree USA website. If you visit telexfreeusa.com you just get dumped at a TelexFree affiliate’s replicated TelexFree page.
And as M_Norway pointed out, Nehra says he only represents TelexFree USA, and there he is on the website.
Gerald Nehra is an opinion for hire. His involvement means the client is dirty, in my opinion.
Keep up the good work, Oz
Hey Mr. Oz. Great job. You saved me man!!! You really did. Thanks a lot!!!
Oz, here in Brazil Telexfree became viral. Everybody knows about it. But Telexfree lies about everything. They say they have operations in “more than 50 countries”, for example.
The lack of information about the company in USA is because Telexfree is actually operating here in Brazil, and uses USA just as a part of its lies.
A lot of friends of mine say they are earning money. It’s a Ponzi Scam, surely.
Congratulations on your website!
There is nothing in Portuguese written with the same level of research and scrutinny. I wonder if you Speak Portuguese and could publish the same articles in Portuguese. If not, I’m SURE there are lots of well-rounded Brazilian jornalists who would be able to partner a translation with you.
I had written to Mr. Nehra myself before, to check his association with Telexfree, and he wrote to me the same information he passed on to you (not related to Brazil).
I wonder if he replied to you back, after you said you weren’t gonna change anything. His name is clearly advertised in the ONLY Telexfree website. So there are two possibles conclusions:
a) He is a complete incompetent lawyer, who doesn’t even do his own research on the company, and doesn’t even google his name to check if his name is at the company’s website;
b) He is deliberately dishonest, and is trying to mask this scheme, or is trying to take out his responsibility.
Question to Mr Nehra: How can you claim “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”?????
After a 2 min check at their website (their ONLY connection to the community) and one can dismiss that statement of yours!
Mr Nehra: Check your facts, or sue the company for misusing your name!
I don’t speak Portuguese but I don’t see why the articles can’t be translated. Google does a decent enough job I think (at least it has when I’ve gone Portuguese to English over the years).
As for Nehra I never heard anything back. Perhaps he actually went and visited the TelexFree website after I wrote back…
Your screen shot is as old as your information. No where does it say on the site you earn $20ROI. THAT’S YOU USING THE TERM ROI IT IS NOT AN INVESTMENT.
You can tell by your credibility that all two or three of you make comments.
Telexfree Welcome the investigation and to your dismay, nothing has come of it. Furthermore the Massachusetts State Attorney General would never have opened the door for them to operate
The screenshot was 1 month old when you posted your comment. Screenshots are PICTURES, not predictions of future changes to something. But they haven’t really changed anything, you can still earn $20 per week per AdCentral.
There’s comments from 8 different people here, including your own comment?
Government agencies will have to handle their own work. It can take a long time before you can see any results.
Registering a company isn’t exactly like “opening a door” to a company. It’s a standard paperwork procedure, and is usually done by a local agent (without any red carpets, without any “Welcome seremonies”, without any newspapers covering the story about “TelexFree has opened a new office in our State”).
Telexfree BRZ has been shutted down by local authorities. Their assets are frozen and no enrolments allowed until the end of the investigation.
They reached above 1.2 Million Brazilians and above U$500 million (estimate). It is by far the largest MLM scam in Brazil.
In the small state of Acre (Amazon) they reached 10% of the population, meaning at least 20% of the state voters. Even though all political pressure, the Brazilian Justice stands against politicians involved.
What is the suggested shortcut to do a claim against Telexfree in USA FTC / FDA?
I don’t know if you can sue the US entity, since there’s no proven link between the Brazilian entity and the US entity other than common name and possibly ownership.
However, you’re welcome to write to the state attorney general’s office of the states Telexfree US claimed to be incorporated in and let them know that you believe the Brazilian entity is linked to the US entity and urge them to investigate and cooperate with Brazilian authorities.
Of course, it’d be best if the letter came from the Acre court or police, but that may be too much to hope for. 😀
Brazilian authorities will do it for sure, but it may take some time and I was trying to expedite the process. I do have the proofs of this connection between BRZ and USA operation. Anyway, thanks. I will do as suggested and keep searching for SEC and FTC pathway too.
(Ozedit: derail attempt removed)
Did either of you ever take the time to enroll yourself to see the mechanics of how the income is earned.
Try it some time, so you wont misinform your readers by misquoting income as ROI.
In Telex Free, if you don’t post Ads, you will not get paid, Period.
Sorry guys, got to go back to work. I have goals…
Why do you need to join TelexFree to understand how it works?
It’s simple, you pay them money and they pay you a $20 ROI each week from newly invested money.
Actually if you don’t put money into TelexFree you don’t get paid. Try posting ads for the company without buying in and see if they pay you your $20 a week ROI.
Great work Oz,
Just to add more information, Telexfree BR uses call back system as gateway to calls from cell phones. This is prohibited in Brazil by law.
In addition, Telexfree does not have carrier license to operate VOIP as a service provider and was caught by our regulatory communication agency ANATEL.
If the frozen assets would be used to pay current participants, it would pay nearly U$ 100 per person. There are participants that bought up to U$30K or more, meaning a big loss for the usual 85% participants on scams like this.
If someone in USA places a claim against Telexfree Inc the serenity would cease. This is an international scam and must end. I am doing all my best to help Brazilian authorities but we need help from our fellows in USA.
All of you said telexfree was shut down, why did it still working in my country (Cambodia) and they give the income regularly? Can u explaint me pls.
TelexFree has been shut down in Brazil, it’s largest investor market.
It’s still paying out in Cambodia because either you’re generating enough new revenue to pay yourselves out via the recruitment of new investors, or your money is coming from US/Canadian investors. Or it might even be coming from Brazilian investors pumping more money into the scheme via the US.
Either way, the bulk of the money is gone and unless one of their other markets grows to the size of Brazil it’s obvious that being shut down in Brazil is going to affect them once the $20 a week “contracts” catch up with TelexFree’s bank accounts.
I believe Wanzeler and Merril are currently in the US trying to turn it into Brazil mark 2.
Let me make an analogy.
Say you are a good boy, you go to the US to live a good life and send money home every month.
At first, you make good money, you send half paycheck home every month. Everybody happy.
Then you lost your job, and cannot find job. But you know family depend on you. So you do not say you lose job. You send money from your savings, while you work jobs that don’t pay enough. You move in with friends to save rent, you eat cheap ramen, you save every penny to send home.
Even that is not enough. You borrow money from your friends. Maybe you borrow from one friend to pay another?
Eventually your friends have no more money to lend, and you have to tell the truth, yes? And now you owe much more money, yes?
TelexFree is like that. It lost its ability to operate in Brazil. But it will not admit self bad. It keep paying by taking money from other places. It keep paying by taking money from people who pay to join. That is Ponzi scheme.
But eventually it will run out of money
Ask yourself simple question: where is money coming from?
In business, simple: buy low, sell high. Restaurant buy raw food, cook food, sell food at higher prices.
What does TelexFree sell? What are YOU selling to TelexFree in exchange for money? If you work, you know you sell labor for salary. If you invest money with bank, bank pay you interest, but low amount.
Why TelexFree have you post ads that that is very very easy to do, and pay you good money every week? Where is money coming from? Anybody have internet, yes? Anybody can post ads, yes? Maybe I write program to post ads! Why pay you when I can keep money? Maybe it just want YOUR money first, yes?
Or maybe head hurt too much thinking such thoughts?
Thank Chang and OZ
what should I do then if I invest alr? How many percent can I take back my ROI?
Do NOT invest in such schemes. There is NO EASY MONEY.
I do not know how much money you can get back if you already put in. Likely your money already given to other people.
I heard Telexfree just bought telecommunications company in Brazil, can you explain me why they do this?
They did that because they didn’t have a license to operate VOIP services in BRAZIL (yes, really!). ANATEL, which is the regulating company fined them recently for that. A small fine, but the message was clear: Telexfree VOIP services were illegal in Brazil.
So they purchased this telecommunications company to serve as the “base company” to operate the VOIP services, and then try to become licensed.