telexfree-logoOne of the recurring themes in Carlos Costa’s sweaty TelexFree news updates, was the assertion that the Brazilian IRS had gone over TelexFree’s books and certified the company legitimate.

carlos-costa-angry-telexfree-bankruptcy-youtube-video-feb-2014Costa asserted as much with the knowledge that the IRS would not comment publicly on their report, and that the only other party with a copy was TelexFree.

What he wasn’t planning on however was the report being leaked to media outlet Globo.

And surprise, surprise… turns out Costa has once again been caught out telling porky pies.

The IRS’s investigation into TelexFree began in late 2013 and finished in February of this year.

Shortly thereafter, Costa took to YouTube and proclaimed the agency concluded that ‘96% of (TelexFree’s) revenues came from the sale of VoIP‘ and found “no irregularities”.

This formed the backbone of many of Costa’s rants to come, even after TelexFree was shut down and exposed as a billion dollar fraud in the US.

The first glaring contradiction between Costa’s report and what was actually published, is that the IRS indeed found irregularities within TelexFree’s business operations.

Gazeta Online (Globo) report,

Among the (tax) cheating found, according to the IRS, was that Ympactus taxes collected between the months from January to August 2012, put them making millions above the revenue volume allowed for this tax bracket.

In at least three official videos the company posted on YouTube, Costa is shown with papers and says that the IRS issued a report endorsing the company’s activities.

“The IRS reached its verdict. And I’m happy with that? Because, as everyone knows, the IRS was the only agency to date that has examined our figures … IRS Personnel did not find any irregularities. ”

However, the report says otherwise.

“Such analysis is not aimed to determine whether there is any illegal activity taking place as this criteria does not influence tax … (furthermore we) can not confirm the existence of the provision of VoIP services on the scale that Ympactus operates on in Brazil.

The report also records TelexFree’s refusal to co-operate with IRS investigators.

During the period of investigation TelexFree presented at least ten excuses for not delivering requested data.

The agency was given answers without any reasoning or evidence, which explained nothing about the questions directed at the company. TelexFree demonstrated an absence of interest in actually providing objective and insightful information to the IRS.

Apologies made to the IRS for failing to submit requested information, especially information related to affiliates and their salaries were, in many cases, merely delaying tactics.

Do your best to hamper regulatory investigations and then turn around and proclaim legitimacy when they fail to put together a complete picture? More of the same from TelexFree…

And just how much spin did Costa apply to the report when talking about it on YouTube?

Contrast Costa’s ‘96% of (TelexFree’s) revenues came from the sale of VoIP‘ and no irregularities” with what the report actually concluded:

Ympactus never provided invoices for VoIP services

Economic activity in the country by Ympactus was derived via training of affiliates to fund the network and their subsequent returns, based on the continued expansion of the affiliate-base, who operated under a facade of alleged sale of VoIP packets. The sales of which remain unproven.

In response to the leaking of the IRS’ report, TelexFree lawyer Horst Fuchs told Gazeta Online that

the IRS report contains “inconsistencies (that are) being appealed, so they reflect only the view of the fiscal agent and not the crystalline truth.”

Riiiiiiiiiight.

Unfortunately Carlos Costa himself was unavailable for comment. Since his crushing defeat in a bid to enter Brazilian politics, Costa has not publicly been seen or heard from.

In related news, money laundering is a recurring theme within TelexFree circles.

A recent court decision against TelexFree revealed that the company had

illegally sent $174 million USD (almost R$500 million) to the accounts of members abroad.

The information was revealed in a decision unfavorable to the owners of the company in federal court in the 2nd Region.

The data pertains to the open criminal case in the United States. Since Operation Orion began in July, the Federal Court in ES had allowed the exchange of evidence between Brazil and USA.

TelexFree attempted to refute the information, claiming ‘it was all a mistranslation of American documents‘.

Now one of their top promoters is under the spotlight, with companies registered in his and his family’s name likely to have been involved in laundering TelexFree funds.

Pelé Reis was one of TelexFree’s more prominent Brazilian-based investors. With humble origins as a food vendor to top investor in the Ponzi scheme, Reis managed to steal over a million dollars (USD) from investors who joined after him.

Investigations have recently revealed that Reis was more than just an early investor though.

Behind the display of Ferraris, other luxury cars and property attributed to “hard work”, there are indications that Reis was one of the organizers a pyramid scheme that spread worldwide.

A federal investigation calls into question the legality the fortune accumulated by Pele, which includes an aircraft valued at R$400,000.

Publicly, Reis represents himself  as a mere affiliate, but the former street vendor, his wife and four daughters, including two teenagers, had broken tax and banking regulations.

Assets belonging to the family have been frozen by the federal courts in Espírito Santo, for alleged involvement in irregularities surrounding Telexfree in Brazil.

The case against Reis was filed in October, however due to the sealed nature of the case it has only now been revealed.

According to the Federal Court website, there is suspicion that companies in the name of Pele, dubbed “piramideiro internet”, were used to mask illegal financial transactions.

As a result, Reis’ assets have been frozen. This includes his R$400,000 plane and a Ferrari Spider 360 Reis frequently used in his TelexFree promotional efforts.

All in all, to date around $500,000 USD in assets belonging to Reis and his family have been seized.

Cooperation between US and Brazilian regulators with regard to their respective investigations continues…