De La Rosa and Crosby file “we knew nothing!” defense
One of the common recurring themes in the Ponzi industry, is feigned ignorance as to the going-ons behind the scenes.
Despite being fully aware of what is going on in the schemes they promote, when it all comes tumbling down, those at the top (who made the most money), are usually first to profess their innocence.
“How could we have known it was a Ponzi scheme?”
“I’m not in management, I’m just an affiliate like you guys!”
“How dare they defraud all of us! I hope they go to jail and everyone gets their money back! (just not from my bank account please)” etc.
In what is seen as a landmark shift in how Ponzi schemes are handled once shut down, the SEC has named four of TelexFree’s top promoters as defendants in their civil case.
For their part in collectively convincing thousands of people to invest money in TelexFree, Randy Crosby, Santiago De La Rosa (right with Crosby), Faith Sloan and Sanderley Rodrigues are now finding their heads on the chopping block.
Seemingly working together, De La Rosa and Crosby’s attorneys recently filed respective “Motions to Dismiss”. After two years of scamming thousands, and Crosby and De La Rosa are now claiming they knew nothing…
At best, the “we knew nothing!” defense raises the question of why a top Ponzi investor didn’t ask where their hundreds of thousands of dollars, or millions in the case of Rodrigues, in returns were sourced from.
One year passes… two years pass… exactly how long is “we knew nothing!” argument expected to hold up?
And what if the investor using the argument has a long detailed history of participation in mechanically identical Ponzi schemes? Is it just pure-coincidence they routinely migrated from one Ponzi scheme to another?
At worst, the “we knew nothing!” defense demonstrates the level of deception Ponzi pimps are all too willing to sink to in an effort to shed personal liability.
In his Motion to Dismiss, Crosby alleges (note that De La Rosa’s motion is near-identical):
There is no apparent rationale for why these promoters were singled out of thousands of promoters of TelexFree.
Neither is it evident why Mr. Crosby would be named in the complaint rather than treated as a victim himself, which more aptly describes his role.
Only in Ponzi land can people milk hundreds of thousands of dollars from people they suck into the scheme, and then turn around and cry victim when regulators shut it down.
If I may, the reason TelexFree’s top Ponzi pimps have been singled out, is because they were the most visible of the promoters (someone needs to remind De La Rosa and Crosby’s lawyers that promotion of Ponzi schemes is also illegal).
De La Rosa held regular calls and webinars to encourage their downline investors (to recruit new investors), as well as regularly speaking at and organizing TelexFree promotional events.
Victims my ass.
The argument that any of TelexFree’s top promoters knew nothing is torn apart by the simple fact that none of them had any significant number of retail VOIP customers.
“What’s that, you made millions of dollars in TelexFree selling VOIP services? Well ok then, how many VOIP services did you personally sell?”
“*mumblemumble* not much *mumblemumble*”
Looking forward I imagine De La Rosa and Crosby’s ridiculous “we knew nothing!” argument will be flatly denied. The court has already demonstrated as much in the granting of first a TRO and now preliminary injunction by way of endorsed order.
Sann Rodrigues has previously also tried to make the same argument on Facebook, although he seems to have had the sense to realize the argument was unlikely to hold up in court.
When you have lesser Ponzi pimps (who in many instances are the direct downlines of Rodrigues, Sloan, De La Rosa and Crosby) jumping ship to TelexFree reload scams, perhaps a demonstration of criminal liability pegged to those at the top of TelexFree will give them pause to consider.
What is a Ponzi scheme after all, without its top cheerleaders (who in many instances go out of their way to reassure those they dupe of the legitimacy of the scams they promote)?
Gone are the days you can Ponzi hop from one scam to another feigning ignorance. And after decades of ripping off who knows how many millions from who knows how many hundreds of thousands of people, here’s to Sloan, Rodrigues, De La Rosa and Crosby finally facing the consequences of their actions.
RIP *wink wink, nudge nudge* psuedo-compliance, and may the MLM industry be better off for it.
Footnote: My thanks to Don @ ASDUpdates for providing De La Rosa and Crosby’s Motions to Dismiss.
Update 15th May 2014 – Steve Labriola has now also filed a Motion to Dismiss, similar to that of De La Rosa and Crosby’s. Labriola’s claim is particularly amusing, as it’s basically nitpicking.
Here’s one example:
(The SEC complaint) further alleges that (Labriola) has appeared in promotional videos. Paragraph 31 offers no clue as to what Mr. Labriola might have said in those videos.
That Labriola was appearing in videos instructing people to ignore any suggestion TelexFree was a Ponzi scheme, up until only a few weeks ago is hardly a secret.
Good luck trying to weasel your way out of being the face of TelexFree in the US, Mr. Labriola…
So, none off these morons heard that Telexfree was shut down in Brazil before coming to USA? For being a suspected ponzie scheme?
Ummmmm how many times did their inspiring ponzie marketing pimp Labriola advise the sheeple on videos and audio updates to ignore and “not” to listen to what the bloggers wrote….?
He advised them right up until the last ugly green tie scripted video he did telling them that the bloggers don’t know what they’re talking about. He didn’t want them to read what a scam Telexfree is. We all know very well that they all read this blog. Faith Sloan even contributed to the blog.
Some of the promoters used the words scam, scheme and ponzie to lure people to their sites when if they did a search for “is Telexfree a scam”? I’m thinking the prosecuters have dealt with this nonsense before.
You couldn’t possibly have worked for or with Telexfree and not have known what it was. Wow..how “do” these lawyers keep a straight face when they say such crap….lol.
One amusing conversation regulators could have with De La Rosa and Santiago:
“So uh, how did you earn money in TelexFree?”
“I posted ads.”
“No I mean how did you actually make money, as in what literally drove revenue for the company.”
“Oh right. Well we recruited new investors into the scheme encouraged them to deposit thousands of dollars. TelexFree then paid us that money.”
“Right. And when did you find out this was a Ponzi scheme?”
“Oh we had no idea until the SEC shut them down. Before that we thought what we were doing was legal.”
The “truth” (not as they see it) is “what happened in Brazil stay in Brazil”. 😀
Skeyrooooo you randy, you big flipping liar! I personally called you to ask you how you could possibly even think that this pig of a deal was anything but a fraudulent Ponzi scheme, your reply was that you were getting paid and that’s all you cared about.
I spoke with your cast of fraud characters as well and they all felt as you did. I hope you enjoy the ride now that you reside dead center of the crosshairs of the Feds.
Your blog made the national news again! Congrats!
These people are all over 21 (and then some) and are adults. Because they say “I didn’t know” doesn’t mean they shouldn’t “have” known.
As Telexfree lived, grew and prospered by the internet so will it be brought down by the internet. One google click and there was a mamouth amount of information on Telexfree’s business, or lack there of. Articles about what “is” a Ponzie or Pyramid scheme.
The investigator’s must be thrilled since they won’t have to rely only on interviews with people but they have the 8 dumb nuts preserved in video and audio blathering their snake oil.
I never stop wondering what in the flawed character of these people allows them to talk and live this kind of lie. Remeber the line “we’re changing lives”? Really?
I supose the same disfuncitonal voice in their heads that told them they were legitimate sales people creating a successful business is the same twisted thinking that allows them to fool themselves into thinking the law is stupid enough to beleive their latest fantasy…
“I don’t know nothin bout no Ponzie scheme!”
Thought? …you may want to re think that defense.
That’s the thing, they can’t.
They have no defense.
They’ll try, as is their right, but, they have been caught red handed with their hand in the cookie jar.
IM(very)HO, anyone who thinks any of them are going to walk away from this unharmed is in for a big surprise.
The lawyers have probably looked at the same thing I did when I analysed potential defense arguments = “what have been presented in court against my client?”.
The main focus in the complaint was on TelexFree itself, e.g. on VOIP sales vs AdCentrals transactions. It also had some significant focus on Merrill, Wanzeler and Craft, a little less focus on Labriola, and a few lines about the top promoters.
There’s a lot of missing details in the complaint, e.g. conclusions without the required logical arguments.
I like how the feds roll. First they file a civil suit, take the money or freeze the assets and they lock you up. Hope they drop the soap.
Ignorantia juris non excusat.
Analogy: If you are traveling anywhere in the world, break the law in that place, then when arrested claim “I didnt know that was illegal” certainly is the most ignorant, lowest common denominator invalid excuse known to man.
The responsibility falls on YOU to “know” if you are breaking the law anywhere. Not knowing is an invalid argument. End of story.
Looks like this argument is all these guys have as a defense and that = truly pathetic. They consciously milked the telexfree cash cow until it plopped over dead. Now its time to stop acting like ignorant victimized rats, man up, and take responsibility for your very poor decisions.
Yep it hurts, but you created it!!
Right. And I didn’t know I was actually committing a crime when I politely asked the old lady for her purse as I gently and delicately held a gun to her chest.
If she had politely refused, I would’ve went on my merry way. No harm done, right? It’s not like I hurt her or anything.
A person can know that ponzis are illegal but not know that Telexfree was a Ponzi.
There are several hundred thousand promoters that could argue the same thing. This does not mean that Crosby and Dela Rosa have not broken the law, but it could mean that they are not held fully responsible for having done so.
This seems to be their hope. They are arguing lack of scienter (no knowledge of the “wrongness” of their acts prior to committing them) which is a question of fact. What did they know, when did they know it type stuff.
Yes, “a person” could know what a Ponzie is but not know Telexfree is one. The Telex 8 are not amongst those in that category.
Both got in in 2012 IIRC.
They knew from the start, and if they’re going to really push it in court, then they should’ve known when all they did was invest and continue to re-invest, and recruit others who did the same.
Actual retail sales on their hundreds of accounts is probably <5 (prior to the comp plan change).
Nobody, not even TelexFree's top pimps can argue they thought TelexFree was about selling VOIP, when over two years they collected hundreds of thousands of dollars and didn't sell VOIP that wasn't incidental to receiving a ROI.
There are actually several legal concepts we need to be mindful:
true ignorance: I *really* didn’t know it’s illegal
negligence: I didn’t know it’s illegal, but I *should* have known
willful blindness: I don’t *want* to know if it’s illegal or not, I just do it
recklessness: I know it’s illegal and I do it any way
The two can *claim* to have true ignorance, but government should have no problem demonstrate at least negligence, or at worst, perjury (claiming not to know when they do in fact know). Willful blindness falls somewhere between the two.
The point is moot.
The SEC allegations are that Telexfree was a “PYRAMID SCHEME” and not a ponzi, making it in violation of Section10(b)of the Securities Exchange Act of 1934 and corresponding Rule10b-5,as well as Section 17(a) of the Securities Act of 1933.
Both organizing and participating in a pyramid scheme are illegal in the USA and, as both defendants accepted money for both, they were therefore required to take reasonable steps to satisfy themselves as to the legality of TF.
IOW, if they were going to accept money, they “knew or should have known” of the legality before accepting a cent.
Additionally, the SEC action is not criminal, but is a civil / administrative action, with different proof requirements and procedures.
The 2 “Motions to dismiss” are about incorrect complaint against the clients. They’re not about “innocence” or “didn’t know”.
I analysed it relatively early, BEFORE all the preliminary injunction declarations were filed. The complaint was relatively thin when it came to the top promoters. I haven’t looked at the additional material (e.g. Doc 45).
Doc 107 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM
Doc 108 MEMORANDUM in Support
Doc 109 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM
Doc 110 MEMORANDUM in Support
Doc 2 SEC Complaint – Jury Trial Demanded
Not “incorrect” claims, but rather due to a “failure to state a claim”. If you dig into why De La Rosa and Crosby think the SEC failed to state a claim, you’ll see it’s because they don’t think there’s proof against them that they misled anyone or knowingly participated in fraud.
That’s naturally a load of bollocks, but it’s the basis behind their respective complaints (I even quoted this argument from Crosby’s complaint).
Why are they singled out… Isn’t that the Faith Sloan argument? “Why are you picking on me”?
It’s an interesting but risky, IMHO, legal strategy, as it basically rolls Merril, Wanzeler (and Costas) under the bus, along with Labriola and Nehra, i.e. “It’s all them! We know nothing! We just follow orders! They told me it’s all legal!”
I’m guessing the evidence list thus far examined by de la Rosa’s and Crosby’s attorneys “suggested” this course of action. Sounds like they want to take the chance that SEC can’t prove more than negligence.
The taxi driver driving the getaway car defense. Was the advance fare payment in hundred dollar bills a clue? Perhaps. Behavior of principles, too.
Interesting. I did not realize the distinction
This bit gets a little slippery.
Fortunately, the proof is in the videos and all the promotional material that are out there related to these two scammers. Hopefully, the investigators have done their homework and preserved some of this widely available material as evidence against these two.
Also, my hope is that individuals who have been scammed will come forward with further video, promotional material, and personal conversations that are not widely available, which can also be used against these two.
Although, the guilt of these individuals is blatantly obvious to those who follow this blog, the court will base its judgement on the evidence and I personally cannot wait to see the evidence presented against these two as well as the other top promoters.
What will be a response that the top promoters give to the videos depicting them proudly promoting a ponzi/pyramid scheme. Will they plead the fifth? Will the cut deals with the regulators? Will they fight till the end? It remains to be seen.
Even right now, if you put the words “DO NOT JOIN TELEXFREE” in Google search, the top video result is of one of the promoters of Telexfree- Samantha Gomez.
She is very articulate and basically tells people straight up that there is no guarantee and not to join if it doesn’t feel right. But at the same time she has several videos promoting this scam and is actively trying to recruit people.
There are many examples of people like her who are or appear to be nice people trying to help others make money. But, in my opinion, they are guilty just like the rest of promoting an illegal scheme. Just because you are articulate and appear to be down to earth and honest doesn’t make you any less of a ponzi pimp.
Anyway, Samantha Gomez’ last Telexfree video was about compensation plan change after which she appears to have jumped ship and moved on to pimping what appears to be another illegal scheme- Argent Global Network. It is quite disgusting to watch these Telexfree promoters openly moving on to other MLM scams and I hope that some of these people will be held accountable by the law or at least be affected by future clawbacks.
The Motion argues (among other things) that because the SEC provided no proof of scienter that the Complaint should be dismissed.
The likelihood that the Motion to Dismiss will be approved is about nil so the SEC should have an opportunity to make its case.
The complaint was “thin” because it only needed enough information to obtain the TRO and Preliminary Injunctions. The Complaint can be amended, fleshed out as to specific actions and individuals as things progress.
The Motion to Dismiss can be summed up in four words….SEC, make your case.
The citations from the videos don’t support pyramid scheme accusations. They tell that “You will get paid for advertising TelexFree each day. You don’t need to recruit anyone or sell anything”.
TelexFree HAD a pyramid scheme component = get paid primarily from the recruitment of others. But the CORE of the fraud was a Ponzi style investment fraud. The Ponzi scheme was the part promoted by most people (they certainly didn’t promote the VOIP service).
Good point, but it makes me wonder why the SEC did not explicitly accuse TF of being a Ponzi scheme. As you noted, the Ponzi part was more obvious than the pyramid aspect of the scheme. Perhaps the SEC were planning to coordinate the case with MA Securities division, which did directly accuse TF of being a Ponzi scheme.
At any rate, I am looking forward to the evidence that will be presented. So far I haven’t seen much evidence specific to these two defendants, but hopefully this will all come out eventually.
What really happened is that TF promoters were WARNED that the TF structure was unsustainable and that at SOME POINT it would collapse. However, people were making money placing ads and recruiting people.
Some people were making more money than they ever did their entire lives. They were buying new cars, houses, vacations, clothes, etc. Psychologically they began to deny to themselves that TelexFree was a Ponzi scheme, after all, the company was making their dreams come true.
When the money is good, people tend to forget its source. Ask drug dealers. Money corrupts. Others KNEW that the company would collapse and they simply made as much money as possible and said to themselves, I will abandon it at the right time and go do some other MLM or heck, I will start my own!
You can see that in Brazil, top TF leaders have started their own schemes a la TelexFree. In the U.S., many of San Rodrigues promoters are peddling another scheme. These guys kept the money they made and are happy. They don’t believe in the clawback cause, where the government can retroactively demand the money back like it did with Zeek Rewards.
Other smart US based TF promoters have quietly fled the country or are in the process of doing so. Isn’t Sloan allegedly in Peru?
As for these guys saying they didn’t know. Well, they know that San Rodrigues got away with using the same defense tactic in 2006 when he was charged with creating a Ponzi Scheme called PhoneClub or FoneClub. Look it up on Google. He evoked ignorance of U.S. security laws and actually avoided prison.
In San’s case, the judge didn’t look at his past in Brazil and probably didn’t want to nail an immigrant claiming to be a God-believer, family man after the American Dream. So, he walked away smiling and who knows if he ever paid any fines.
Today, he won’t be able to claim ignorance, only that he is a victim hoping the Justice system will slap him on his wrist, pay fines and walk. Same with these other guys.
Concerning BEHINDMLM – because it publishes the truth, people involved in MLM schemes will likely try to discredit it. When the soccer player is too good, the opposing team simply tries to physically hurt him so he can’t play and score. It’s called playing dirty.
People living in denial of ponzi schemes and those joining new ponzi schemes do not want others to trust behindmlm. BehindMLM warned people about Wanzeler and company as soon as TF began to become popular. People in Brazil warned others. People like Luis Nassif. Look it up.
Nobody wanted to believe TF would collapse. The money was good. Now, it has collapsed so they blame blame blame. The blame game. The only problem here is that the authorities have not caught the rest of first tier promoters that are using TF to build and promote other ponzi schemes or other MLMs. They multiply like fruit flies.
Now is the time for the U.S. justice system to pick up the most visible promoters and the ones right below them as well and draw the line at anyone that made over $100,000 and put them all on the chopping block, especially if they were under the promoters indicted so far. Otherwise, investors will be victimized TWICE.
Can’t claim ignorance or being a victims after this one:
ASD Updates reports James Merrill has been appointed a Public Defender in his criminal case.
SEC doesn’t have any “Ponzi scheme rule” or “pyramid scheme rule”. They have some anti-fraud rules.
* Securities and Exchange Act 1934, section 10b and 10b-5.
* Securities Act 1933, section 17(a)
Section 17(a) makes it unlawful to “employ any device, scheme, or artifice to defraud”, “obtain money or property” by using material misstatements or omissions, or to “engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.”
De la Rosa and Crosby have clearly participated in “something” related to unlawful sale of unregistered securities, but the current defense arguments from their attorneys could actually be expected.
I pointed out that the complaint was rather vague for the top promoters several days ago, the same day I analysed Sann Rodrigues’ “I’m a victim too” argument. They have clearly done something unlawful, but it was difficult to find out exactly WHAT (in the complaint).
Awesome! That basically sums it up in most scams.
So, what made it possible for the court to order not only the freeze on the individuals bank accounts but to also demand that cars be sold back to dealers and the money turned over? Are houses, boats etc expected to be sold now as well if purchased during the time the ill gotten gains flowed in?
And if there isn’t a high probability of guilt than how was the court able to do this “before” trial? selling cars to be specific.
I’ve noticed this with quite a few MLM schemes. The scheme operators know that people will be suspicious as to whether or not their business is a scam, so they’ll put all sorts of websites all over the internet about “Is _____ a scam?” and of course when you read their websites they conclude that it’s not a scam but an incredible moneymaking opportunity. I saw that with Zeek Rewards, too.
The simple fact is that if you hear of a new MLM business and you search the name along with the word “scam” and it pops up with a bunch of websites giving it glowing reviews, you should be extremely suspicious. No legitimate business needs to head off suspicion as to whether or not it’s a scam.
I think they call that spamdexing or Google-bombing.
That rubbish is annoying. It’s gotten to the point where I can’t tell people, “just Google it” because 1) people trust the Google a bit too much, 2) people aren’t likely to search beyond the 2nd results page. So in a way, they have those search results cornered.
Actually, when top promoters of pyramid schemes or ponzi schemes claim they did not know they were involved with illegal activity, they are probably right.
In this “business” it’s almost impossible to deceive other people without deceiving yourself, especially when people are moving from one scheme to another. They first loose their will, and then the ability to figure out if it is legal or not.
Most schemes collapse without the help of any authority, and the top promoters will then find creative ways to explain why it went down. This can deceive a nice percentage of their downline to follow them into their next scheme, but even more they succeed deceiving themselves. It’s a phenomenon called cognitive dissonance, they make up good excuses to avoid admitting that they made a stupid choice.
Of course, this is not moving the responsibility away from the top promoters, but it is good to have in mind how these people think.
When I first saw this, we’ll call it a….”marketing technique” I thought, what an asshole luring people in to their site this way….but then…?
I actually had to hand it to the little crook… It was clever enough to get me to go to their site.
Type the word scam next to ANYTHING and see what you get. Try “Mother Theresa Scam” and see what comes up, ha ha.. Googles job is to find what you are looking for. 🙂
The Court found that it was “reasonably likely” that the defendants had engaged in the actions alleged in the Complaint and that there was a “strong indication” that they may “conceal and dissipate assets” which could be subject to an order of disgorgement or imposition of a civil penalty.
Under the Injunction the defendants were directed to “hold and retain funds and other assets” and restrained from selling anything they owned or had control over.
The Preliminary Injunction does not appear to force sales, but only direct the defendant to hold and retain what they have.
One might conclude from this that the car was voluntarily returned since Delarosa’ bank accounts were frozen and he could no longer make monthly payments on the vehicle anyway.
There was also a lis pendens (notice of pending lawsuit) filed with the County Clerk on one or the other of these two defendant’s homes. I believe the SEC permitted limited funds to be released for “living expenses” but clearly default on the home loan is a distinct possibility as this drags on.
Discussed above are the provisions of the Preliminary Injunction. During the BK proceedings it was revealed that forfeiture actions have also been instituted against unnamed parties so there is likely to be outright asset seizures in the future.
To understand, it is first necessary to have a basic understanding of the difference between “criminal” and “civil” law.
The SEC doesn’t have the capacity to prefer criminal charges and relies instead on civil law.
If there’s ONE THING I won’t try to analyse, then you have just mentioned it. 🙂
The “Motion to dismiss for failure to state a claim” seems to be a valid defense argument. Now it will be better to see how the SEC lawyers will respond to it than to try to analyse it.
The complaint was relatively vague for Labriola too. Labriola’s attorney used it in a defense against something.
The primary function of a court is to provide justice, the court’s own definition of it. That’s probably about the right to a fair trial, not about all the other ideas people might have.
If the top promoters do not receive jail time as well as having to pay restitution for all monies illegally gained in TelexFree, ponzis will continue to spring up every week and these promoters and others will continue to to steal peoples monies.
Put them in Prison and promoters will fear joining ponzis.This is how you end the games!
Please investigate MAPS (MyAdvertisingPays), they are steadily growing, promoting on social networks with top promoter Simon Stepsys as well as the creator MIke Deese who plays off of the fact that he is an “HONEST” disabled USAF Veteran and there are truly idiots out there that believe this shit.
thank you gentlemen.
The question arose for me because I thought one of the person’s was told they “had” to return several of their cars to the dealership and the money was to be held. I wondered how this was possible until the case went to trial. Why not force the sale of boats, houses etc…I apologize if you’ve already answered my question.
@lil rnd man
My understanding is then, the SEC’s case is the “SEC” bringing the suit against Telexfree for breaking security laws. “Not” that it is bringing the suit against TF for the people who have lost money? I guess thats wrong thinking on my part since the SEC is the one that would be in charge of the claw backs?
Once it is determined by the court that in fact it is a scheme…if it is…. then the federal government would bring criminal charges? And what would those charges be?
I apologize if my questions are framed poorly…just got home from a busy “work” day and a bit brain fried.
If there’s ONE THING I won’t try to analyse, then you have just mentioned it.
@ Norway…I’m concerned you wouldn’t even try…. are you feeling ok? Maybe you’re having a sugar low….lol.
I hope you know I mean that with only a joking poke at you.. .
The Motion to Dismiss bears no relationship to “what made it possible for the court to order….the freeze on the individuals bank accounts …”
The freeze was due to the Complaint, which provided the rationale for the Temporary Restraining Order which was confirmed by the Preliminary Injunction.
In the impossibly unlikely event that a Motion to Dismiss is approved then the Preliminary Injunction would be lifted as to the defendant(s). This is so unlikely because the judge would almost certainly give leave to the SEC to amend their Complaint with more particularity rather than dismiss it outright.
The defendants didn’t even bother to deny the allegations. They only asserted the SEC did not properly assert a claim. That’s weak. As mentioned before Motions to Dismiss are the legal equivalent of telling the SEC to “prove it”
As per the Preliminary Injunction the defendant’s assets have been ordered held and retained so that they are available in the event that disgorgement or a civil penalty is levied against the defendant.
It’s premature to force the sale of assets since the allegations against the defendant have not yet been proved. As I said earlier I doubt the car sale was forced.
The end game here is that the SEC seeks permanent injunctions against all defendants, proscriptions on future activities and civil penalties.
Very often a criminal case runs parallel to the SEC action. The criminal case is usually run by the Department of Justice or a State Attorney General’s Office.
Article updated with news Steve “everything in TelexFree is awesome” Labriola has filed a similar “the SEC hasn’t proven anything against me” motion to dismiss.
I doubt the SEC is investigating everything all by itself. There is the FBI, Homeland Security and other agencies after the TelexFree pyramid scheme.
The only problem i see right now is that top promoters that made a lot of money in the U.S., mostly the cheerleaders for the Brazilian and Hispanic communities may be preparing to flee the country with all the money they made.
Think about it, how much money do you think people right under Sann Rodrigues have made? If their accounts are not frozen or investigated, what is the use of arresting Merrill?
At least with him, the money was picked up by the authorities before the checks were cashed. The others still have the money in their accounts or under their beds. Why not go after those millions as well before they move to Peru, Brazil or who knows where? Or worse, start investing that money into PAYMONY, Banners Viewer, Wings or whatever other crap is out there now?
Merrill has also filed “net worth forms”, however he hasn’t provided any hard figures in the bank accounts cited. Other than that he’s only declaring three cars, his house and $70,000 in another property.
He wanted this information filed under seal but that request seems to have been ignored by the court.
Wanzeler is still in hiding, but arguing he should be allowed to keep the $3 million he has stashed away in Singapore.
@ Oz lol…….to funny to respond to. head in hands….ugh!
I can only hope the court date for these bumbs is on one of my days off. I’ll be happy to travel to Boston for this. On the other hand…..I may give a day of pay for this even if I don’t have it off.
Also Faith Sloan appears to have returned to promoting revenue-sharing Ponzi schemes on Facebook:
Changes Worldwide is a “revenue-sharing” scheme that accepts up to $25,000 in investment from affiliates, promising them a share of a 90 day revenue-sharing pool.
Typical “ad-credit” Ponzi scheme, modeled on BidsThatGive (which is modeled on Zeek Rewards), as that’s what the owners were previously involved in.
Sloan is currently under a preliminary injunction, prohibiting her from defrauding people or having anything to do with the sale of securities (registered or otherwise).
Her conduct today is truly baffling.
One more, just incase anyone was wondering what happened to “TelexFree Rambo”…
…he was arrested last Tuesday on charges for receiving stolen goods. Police found “mobile phones, tablets, video games, televisions, and computer parts” at his house.
Where does this come from ?
IIRC I read it in a report a few days ago or it might have been court filings. Wanzeler’s lawyer was arguing that he wasn’t in hiding, just that he was “evaluating his legal options” or some such.
I’ve been reading so many legal documents/reports over the past week it’s hard to keep track of where information that’s not big enough for a separate write-up comes from.
(Ozedit: I think it was the consent order documents from the SEC or Wanzeler’s lawyer)
Faith sloan needs to repent!
I wanna know why Faith Sloan is the only one of the defendants who isn’t afraid of keep promoting another ponzi… Is she stupid, or too smart?
It has been my observation over a long period of time that what passes for “positive thinking” in the shady world of ponzi / pyramid / get-rich-quick schemes can eventually morph into the type of denial which leads to observers asking “WTF were they thinking. Why the hell didn’t he / she get out when the going was good and the writing started to appear on the wall”
Look back at the history of P.I.P.S, AdSurf Daily, Zeek, Profitable Sunrise and other similar schemes and you’ll see the same question was asked of the names behind them.
It’s the US where he who first turns over to give evidence on behalf of the state, will get the best plea bargain.
& “self interest” is the strongest characteristic of these ponzi guys.
My impression is that these Motions to Dismiss for Failure to State A Claim are pretty routine. I suspect every defendant will file one.
Looking at the filings a little closer reveals that the motions are not so much saying “the SEC has not proven anything against me,” as they are saying “what exactly is the SEC saying I did.”
The defendant is entitled to know the particulars of the allegations in order to prepare a defense and these motions are intended to force the SEC to be specific in their allegations. If the SEC fails to state their claim with sufficient particularity the defense argues, the judge should dismiss. Since dismissal at this point is enormously unlikely the Motion’s actual intent is to narrow down the issues the defense must address.
The “Motion to dismiss” can also have a different function = to point out that the defendants are too different to be collectively referred to as “the defendants” in some of the points.
Merrill, Wanzeler and Craft can clearly have been in positions where they had direct knowledge of financial transactions and how the company worked. It’s less likely that a marketing director will have the same knowledge, and it’s unlikely that external promoters will have it.
She seems to be pointing the proverbial middle finger at the SEC and all her “haters”. Hopefully, her big ego will get deflated soon when the authorities slap a pair of handcuffs on her and put her in the slammer.
At that point, I would recommend that she keeps her Afro. It makes her look more intimidating and will ensure her a place at the top of the pecking order in the penetentiary.
The Boston Globe is reporting that the wife of Carlos Wanzeler was arrested on a material witness warrant when trying to leave the USA from JFK Airport, according to the US Attorney’s office.
Things are getting more complicated at House Wanzeler: “Wife of TelexFree co-owner arrested at JFK Airport”.
Apparently his wife is now considering her legal options as well.
It’s taking a while, but one gets the feeling these guys are starting to wake up to the fact this is serious and not the same sort of ponzi players nonsense they’re used to.
Wooh they nabbed his wife.
How many more people is Wanzeler going to sacrifice before he mans up and faces the consequences of his actions?
Who made big money with TelexFree?
James Merrill – Arrested. Court Friday
Carlos Wanzeler – Fugitive. Left wife and kids. Maybe in Brazil.
Katia Wanzeler – Will meet you later, honey. Or maybe there is no honey between the two. Katia not the smartest. She could have gone to Corpus Christy and paid off a boater to hauler to Mexico and then fly from Mexico to wherever.
San Rodrigues – Says he’s a victim of TelexFree’s mismanagement just like he was in 2006 with FoneClub. – No arrest for him yet. Assets and bank accounts frozen. To save his own butt he will likely rat on everybody.
San Rodrigues Cohorts – that is the group of people he organized to promote his downlines. None charged yet, but could be under investigation. Let’s hope so.
Then the other promoters that are claiming ignorance of the pyramid scheme. No arrests yet.
How many people that made big money are trying to escape justice by flying out of the country or sneaking out in the middle of the night?
I bet when all this is said and done, there should be at least 20-25 people facing charges, not just a handful.
When I turned on the lights in my kitchen this morning, a large group of roaches scattered in different directions.
One of them held a TelexFree sign oblivious to the can of Raid he quickly passed.
Well, looks like TF has change its website again. This time, to just a “goodbye, see you soon, we will miss you money” sort of message.
Funny thing is: at first, TF website was all in Portuguese and then (poorly) translated into English. Now they just don’t give a f**k to whatever language most of their “promoters” speak. They just publish things in Enligsh.
I guess Wanzeler was not available to translate texts anymore.
Boston Globe reported that Katia Wanzeler was taken into custody at an airport (presumably Logan Intl at Boston)
Ooooh… The plot thickens… Boston Globe published details on the Wanzelers escape plan.
Well, one thing I’m sure of: if Interpol contact Brazilian police and Wanzeler get arrested in Brazil, he will face a much, much worse prison life than the one he could have in the US.
She was arrested at JFK airport in New York, according to the update from patrickpretty.
She was probably trying to “evaluate one of her legal options”. 🙂
According to a Brazilian TF-zombie’s YT videos, she “went to the airport but, knowing the name “Wanzeler” was on the news, she just decided to go back home. She was not arrested”.
Wow… desperation makes people really lose their minds, huh?
I agree that 2 years in a overcrowded Brazillian prison in which cellmates behead each other can be worse than 20 years in the relativly confortable and safe prisons of USA.
I only wonder if he will be really arrested in Brazil. If so, I wonder if he will get the common privileges that white collar criminals usually have here. In the end he might be better than he would be in USA, or not. If we see his severed head in another gruesome Brazilian prison video on the internet we will know he made the bad choice.
Why do I keep thinking he is already in Venezuela or Cuba. I don’t think they chop of people’s heads there.
You say to-may-to, I say to-mah-to. 🙂
Technically she’s not “arrested”, but “detained” as material witness. She wasn’t charged with a crime that required full “arrest” that I recall.
But the fact is she’s taken into police custody at an airport, WITH a one-way plane ticket… is looking really really bad, and is likely currently being interrogated.
But you know TelexZombies will leave out the “inconvenient” bits and spin the story any way they like.
I wonder if they can keep her in jail or restrict her travel. If they let her into a car she can drive into Canada and just disappear. Theoretically speaking. Who knows how many other cars she had stashed somewhere under some company’s name or relative’s name.
And you can bet that any one else related to TelexFree 8 is on a no-fly list, as well as names given to all car rental companies and long-distance buses and trains and such.
…but they do in Mexico and Iran. Not that I have actually seen them do it. I read about it.
If the U.S. authorities wish, I can track down and then deliver Mr. Wanzeler to any U.S. Embassy of any of Brazil’s neighboring countries.
I’m not a specialist in criminal laws but AFAIK a Brazilian citizen cannot be extradited (except when involved in drug traffic) but, due to some agreement between Brazil and USA, if convicted in the US, the Brazilian criminal will serve time in a Brazilian prison. That does not apply to death penalty or any other penalty that does not exist in Brazilian laws.
If sentenced to 20 years in prison, and if US and Brazil police/judiciary come to an agreement, Wanzeler would serve those 20 years in one of the world’s worst penitentiary system.
I’ll try to find more information about it. I’m sure Brazilian iG news portal or Veja magazine has published some article describing that.
Do it, do it, do it!
If for nothing else than the lulz!
(and it’d be one hell of a story to tell…)
TelexFREE Complaint Form
Telexfree was the subject of a report broadcast tonight in Brazil, on Globo channel’s very popular TV show “Fantastico”.
Here’s some translation:
0:00 – 0:13 : The hosts talk about Telexfree being blocked in Brazil but still working in the US, attracting Boston people.
0:26 – 1:06 : Reporter explain TF is considered one of the biggest scams to date; Wanzeler and Merrill are the founders; Merrill is in jail and Wanzeler is hiding; Up to 20 years in prison if guilty.
1:07 – 1:50 : Some people talking about losing money, selling business, apartments etc. to put money in TF. Some people invested up to $500,000.
2:12 – 2:37 : SEC report is shown. Galvin briefly interviewed.
2:40 – 3:12 : Host explains how a pyramid scheme works.
3:13 – 3:45 : Reporter talks about police raid and Craft fleeing with the checks. Mentions Wanzeler’s wife being under custody.
3:46 – 4:38 : Reporter now focus on Brazil, saying they went (on Friday) to TF/Ympactus HQ in Vitória, Espírito Santo state, and even though there is a warning informing “service in this office is suspended”, they found A LOT OF PEOPLE ACTUALLY WORKING THERE!!! (that raised o thousand follow up questions in my mind). The reporter asks if the company is active, if Carlos Costa, Wanzeler or Merrill (duh) are there, to no answer. You can see some people hiding their faces (as you can also see some wearing Telexfree blouses), until a very upset woman stands up and kick the TV crew out of the office. She says “fu** off, we cannot talk, we will call security, leave now, now, now, please.”
4:39 – 4:55 : They mention Acre’s PP says everyone who fooled people into the scheme may be pointed by justice as accomplice.
4:56 – 5:24 : The reporter tried to find Carlos Costa and Wanzeler in their addresses. One of the houses pointed as CC address is abandoned and in another of his addresses some woman says on the intercom that Costa had traveled (did she meant “fleed”?).
5:25 : They interview TF lawyer in Brazil, Danny Cabral Gomes, who says “we’re no pyramid”, “a lot of people in the base had earned more money than people who invited them”, “the audit will prove us legit”, “people will receive their money back, for sure”.
A few minutes after they aired that news report on TF, this was published on TF Facebook page:
Funny thing: they firts published “Telexfree informs…” and them edited the FB post and changed to Ympactus. That shows even scammers see no difference between those two companies owned by the “three amigos”.
Video has been removed?
Here’s another link: youtube.com/watch?v=dcPnruN48H8
(Globo TV is quite known for not allowing their images to be published on YT…)
Here’s the official link to Globo’s Fantástico TF report:
Thanks for that. Globo themselves don’t upload their reports?
I like how they opened with Carlos Costa’s fanatism… no wonder he’s pissed.
Prediction of his response: “God rahrahrahrah audit rahrahrah (insert waving of blank paper documents here)”.
Either that or some TelexZombies filed a DMCA takedown request.
Globo publish its videos on its own portal (I have sent you the official page where the article is, including the complete video).
I’m pretty sure CC will come up with a very interesting story about why so many people are still working there. My guess? They are helping someone, or CC himself, to promote/create some other scam under the radar (and authorities noses).
How could they pay that many people if ALL MONEY they have is frozen in Brazil and US? The TV crew found something very, very fishy there.
I’m also sure he will mention it is all a bunch of lies, media is not to be trusted, they will sue Globo TV, blah blah blah… Stay tunned.
Again, the biggest TV network in Brazil is very, very shy in the report about Telexfree and there is no real investigation. Damn it… its weaker than its prior report that atracted masses of zombies to protest in front of the Globo offices.
None of the many telexfree lies is debunked in the air. The report only shows what the authorities says and what telexfree says. No added value. The only REAL interesting thing shown is almost accidental: what the hell so many people is doing “working” at Ympactus office? But the network does not try to investigate that.
OZ makes a much, much better investigation work.
Do we have ANY TV station anywhere in the world doing a real investigation on any pyramid/ponzi scheme not yet uncovered/dismantled by justice? Not an easy question to answer.
I’m pretty sure they should do some reports on how people should avoid scams, rather than keep talking about something that is quite dead already.
Of course it would be very interesting to watch all the lies and liars being unmasked on live TV, but let justice/lawyers do their job.
Things would be different in a scenario where a big scam (like TF) was not under justice radar yet. That would be a hell of an exclusive TV report.
Anyway, AFAIK scammers, anything published on any media with no “justice evidence” to back it up would be called a lie. Even after tons of evidence against TF was published, people still believe Merrill is not in jail, Wanzeler is on vacation, TF will be back and Carlos Costa is God reincarnated.
Oz has to “defend” his statements (per say) on a daily basis. If he publishes some article, a bunch of scammers call it BS and he says nothing, they’ll believe they were right (and will use it to prove their twisted ideas).
My point is: unless you have a news portal focusing on scams and their scammers, or a whole (weekly, daily…) TV show segment on that matter, any random news would be just to sumarize what’s known or to alert people.
I dont care if all TV stations are doing the same (nothing). What I expect from a big, *rich* TV network as Globo is: Show they have some “balls” and do real investigation.
I dont care if the zombies are going to bash the report, no matter what is said, because they are going to protest no matter what is said! So unless Globo is afraid of something (and this is the network that has a massive protestant cult as enemy already – IURD).
I dont understand why do a report that is going to be bashed anyway and do not add anything! As a non-zombie myself, I want to see a real investigation. I want to see journalists uncovering more info to be added to the process.
This is not “a scam”. This is THE SCAM. The biggest (non political based) SCAM that ever targeted brazilian citizens. Telexfree rise and fall is history in the making!