telexfree-logoThe Dominican Republic is emerging as one of the hardest hit TelexFree investor markets. Yet, despite a significant number of Dominicans investing in TelexFree, local authorities failed to take any action against the company or its top local promoters.

Not because they didn’t know TelexFree was an unsustainable Ponzi scheme mind, but rather because their hands were tied behind their backs due to the shortcomings of Dominican law.

Attempting to address why his department did nothing as hundreds of thousands of Dominicans invested their money with TelexFree, Gabriel Castro of the Superintendent of Securities explained:

despite having knowledge about Telexfree, the Superintendent of Securities could not take any action (because) the country has a legislative vacuum that does not give them guidance on how to proceed (in these matters).

Noting the surge of TelexFree reload scams emerging on the promise of recouping losses of TelexFree investors, Castro noted the agency was

aware that there are other similar businesses operating in the country and (that they have been) reported to the Attorney General.

(Castro) assured that the (Superintendent of Securities) will continue investigating (TelexFree). The Dominican Republic is not the only country that has been affected, and there are many others, including the U.S. and Brazil.

Whether the Dominican Attorney General takes any action remains to be seen. They certainly didn’t in the case of TelexFree, with how many millions of dollars Dominicans lost to the company yet to be revealed.

Apparently the Institute of Consumer Protection had alerted the Attorney General to TelexFree sometime in the past, however the warning was ignored.

Meanwhile I’m not too sure what the point of further investigation is, given the agency appears to not be able to do anything with whatever they learn as a result of said investigation.

Taking the blame-game evidently now in play down in the republic to another level, Cesar Pina Toribio, “legal adviser to the Executive”, effectively said the TelexFree debacle was the fault of Dominican investors:

Dominicans are very naive when they offer villas and castles. The public needs to know that these companies are a big scam.

The public already knows several cases of this type (of business, but are) still engaging in this activity.

When you have top promoters swearing on the legitimacy of Ponzi schemes like TelexFree and the Dominican government refusing to do anything about, exactly how more vulnerable investors are to know a company is “a big scam” wasn’t clarified.

On one hand I get that TelexFree wasn’t a company based out of the Dominican Republic but when hundreds of thousands of people in a country with a population of less than 10 million get involved, surely you figure something is up?

Thankfully there is some good that might come of the TelexFree aftermath though, with a bill, set to be presented before parliament today, directly aiming to

 avoid the massive fraud committed by companies and individuals engaged in collection of public financial resources, through so-called pyramid schemes.

Amazingly, the bill is being reintroduced after it was previously disapproved by the lower house. One would hope that the bill makes it through this time around… but from the sounds of it, nobody in the Dominican government seems overly concerned about the country becoming a scam haven.

What a mess.


Update 23rd April 2014 – Too little too late?

Several agencies probe the whereabouts of tens of millions of pesos allegedly scammed from Dominicans by the TelexFree ponzi scheme as well as the identity of its owners.

Justice Ministry anti-money laundering unit director Germán Miranda said the Office Prosecutor and the financial authorities will meet Wednesday morning to coordinate the investigation and possible confiscation of properties.

He said the National District Prosecutor and the Securities Superintendence will seek to identify TelexFree’s intermediaries and promoters, noting that the whereabouts of the millions swindled from investors is their main target.

Miranda said regarding the foreigners affected, they’ll request the collaboration of U.S authorities to determine what happened with the money.

Apparently signing people up with monopoly money credits was rife in TelexFree, so I’m not sure how the authorities’ collection efforts will go. Still, I suppose at least it’s something.