Police called in after TelexFree change old contracts
Despite the uncertainty over TelexFree’s ever-changing new compensation plan, those that had previously invested funds before March were reassured their weekly ROIs would continue to be paid out.
This made little sense considering the company was under SEC investigation, but was largely seen as a way to keep their existing investors happy. I haven’t seen any official numbers, but TelexFree affiliates number in the thousands and there are purportedly over four million existing AdCentral investment positions active.
All was well until yesterday, citing “regulatory requirements”, TelexFree decided to renege on their earlier promises.
We initially thought new information circulating about the old investment positions might have been a TelexFree April Fools joke, but as more and more sources confirmed the news, it became apparent that the changes were indeed going ahead.
As has been the trend of late, TelexFree’s latest announcement was devoid of any fanfare or formality, with the following message quietly appearing in the affiliate’s backoffice yesterday afternoon:
The worldwide launch of the new TelexFREE compensation plan is governed by a number of regulatory requirements. One of these requirements is that all Promoters receiving commissions must have personally enrolled retail customers.
To satisfy this requirement, certain Promoters must be ADFamily Plus Qualified with a minimum of 5 personal customers and have recruited and trained at least 2 ADFamily Qualified Promoters, one on each side of their organization.
Regardless of your qualification status, Promoters who have earned income exceeding the cost of their TelexFree99 wholesale package inventory, may use the balance of their back office credit for invoice payments using the pay with bonus function.
Additionally, TelexFree also shut off their payment system, prohibiting any affiliates from making withdrawals of their earnings.
As for the changes, existing TelexFree affiliate investors will be required to either sell or personally invest in five VOIP positions ($249.50 a month) and personally recruit two affiliates who do the same.
If they fail to meet these requirements, TelexFree will stop paying them their $20 a week AdCentral ROIs.
For those who had previously invested in TelexFree AdCentral positions and were hoping to just quietly withdraw their weekly ROI until their positions expired, the news must come as a pretty big blow. Many of them had been persuaded to make significant last-minute investment by their uplines as compensation plan changes loomed.
As happened the last time TelexFree made official changes to their compensation plan, and with millions of dollars now on the line, a mob of furious TelexFree affiliates stormed the company’s Massachusetts headquarters.
Initially, a rather frustrated Steve Labriola came out to address them. Weary of his last address being published online, before speaking to the wall-to-wall crowd about the recent changes, Labriola requested people “turn off the cell phones”.
This was met by a firm chorus of “No!” from affiliates, to which Labriola responded:
Last time I addressed everybody, everybody went right onto YouTube.
At least one female affiliate in attendence can be heard to reply, “so what?”
So what indeed. Last time affiliates stormed the TelexFree office neighboring companies in the building filed complaints. This prompted Labriola to interrupt an “important” phonecall for a few minutes and try to persuade affiliates to vacate the building.
Continuing his address, Labriola then raises his voice to shouting-level:
The facts are everybody needs five customers. Two personally sponsored agents (affiliates) with five customers to withdraw your funds (and) to transfer your funds.
You can pay invoices all day long with that money, but we are a customer acquisition company – we need customers. So that’s what you need to do to get customers.
Affiliates immediately begin asking about the “old plan”,
Affiliate: That’s the new plan, what about the old plan?
Labriola: every plan, that’s everybody.
Affiliate: Why? Why you guys change it so quick?
Labriola: we need customers.
Affiliate: why you guys change it so quick? Why you guys change?
As another affiliate asks “hello?” and shouts of “what about the contracts?” can be heard, Labriola turns his back on the crowd and appears to briefly engage another group of affiliates behind him.
Towards the end of the video an elderly woman can be seen to approach Labriola and wave her finger at him.
The sore point with affiliates on the new changes is that, despite Labriola’s newfound insistence that TelexFree is a “customer acquisition company” (Gerry Nehra psuedo-compliance at work), what having to have five VOIP customers translates into for most investors is an additional $249.50 withdrawal fee.
From what I’ve read those with a large amount of funds invested will simply wait till their yearly ROIs have expired and then pay the fee to withdraw. Those who have come to rely on TelexFree’s ROIs (making monthly withdrawals), are those who are going to be most unhappy with the changes.
Other than those with large downlines and/or a huge amount of money invested, they simply can’t afford a $249.90 monthly fee to access their returns.
What happens after Labriola’s announcement is unclear, but with affiliates refusing to vacate TelexFree’s office, at some point the police are called in to restore order.
Police responding to the scene arrive to an office so full that the front door cannot be opened properly. Inquiring as to what is going on, angry TelexFree affiliates tell them “We are employees. They have our money, they don’t want to give it back!” Another affiliate tells them, “not only us, lots of more people”.
Towards the end of the video police can be seen entering the office, presumably to talk to TelexFree management.
I’m not sure how much time passes, but with TelexFree corporate staff hiding out in the back of the office, the company then sends out top affiliate investor Santiago de la Rosa to address the crowd.
Flanked by police officers on either side, de la Rosa emerges as the officers warn affiliates:
Don’t be yelling. This is private property and you’re going to have to get out after he (de la Rosa) answers these questions, alright?
De la Rosa then steps forward and addresses the crowd:
Guys, I talked with Steve and asked him the suggestions that we have. And he is calling Carlos and they are talking, trying to figure out something, (so that) all of us can be satisfied.
But, this is something that they can not say right now “This is this!” They are looking (at) all of the suggestions that we passed through. I specified very, very clear.
They are going to let (us) know in the next, y’know maybe in the next thirty minutes, one hour. I think on the website, I think they’re gunna put something up on the website.
An affiliate then asks about the issuing of TelexFree 1099 tax statements to US citizens, to which de la Rosa responds:
Guys, a lot of people already receive their 1099. (Affiliate talking over de la Rosa: “We don’t want anyone to get hurt or arrested”).
A couple of us, we do not receive but we are going to receive it. They are working very hard to do that.
And I know that in this week…
One of the police officers interrupts de la Rosa at this point,
Is that the 1099 for last year? You should have that out by January 31st. You have to by state law and federal law. How come they didn’t get their 1099?
A stumbling de la Rosa tries to answer the officer,
de la Rosa: I, look, I, I not receive my one either.
Police Officer (talking to the affiliate who initially raised the issue): That’s something I’ll ask for you, okay?
de la Rosa: I’m told that all of us will receive our 1099 before Friday.
At this point Spanish-speaking affiliates mob de la Rosa with questions and concerns as police officers continue to look on. Eventually it becomes too much, with de la Rosa declaring
Guys, you make question to me (but) remember something: I am not the company, I am a promoter.
I just take all the suggestions and give it to them. Right now, I’m going to my house. I’m going away.
Despite de la Rosa drowning in affiliate enquiries and police officers openly questioning the legality of TelexFree’s business practices, nobody from TelexFree management materializes.
With de la Rosa directed by officers to exit back into TelexFree’s office, a police officer is left to address affiliates:
Hey guys, somebody’s going to have to get in charge here. Okay?
You need to organise and get somebody to get a lawyer in here. Understand your rights: This is labor, this is payroll, this is everything.
You need to get somebody in charge, you guys need to organise something, alright?
An affiliate then remarks ‘I think the best thing is to just see the attorney-general’, a suggestion the police officer agrees with:
Yeah, the attorney-general, call your state reps, state senators.
Another affiliate asks the police:
is there any chance you could get somebody to come out who is not a promoter?
The police officer bluntly replies,
none of them are gunna come out man, they’re staying in there. They see this many people, they’re scared.
Nervous laughter breaks out from some of the affiliates, with police then moving to evict affiliates from TelexFree’s office:
You can’t wait here, this is the thing: You can’t stay here anymore.
I mean this is what I’m trying to tell you: You need to organise, you need to get somebody to get a lawyer, a labor lawyer. You can’t just come up as a mass. It’s not going to work that way.
We’re hear to protect everybody, those people (the officer points to TelexFree management hiding in their offices), and you. We don’t want to see anybody get hurt.
Towards the end of the video one affiliate makes a mysterious request of the officer:
Affiliate: The guy, the guy that took off with a bunch of files in his car, did you guys track him down?
Police officer: Somebody has, the other officer is taking that out. You know what I mean? He’s made sure he has a picture of the plate, the uh Connecticut plates.
Why an individual fled TelexFree’s offices with “a bunch of files” when TelexFree affiliates arrived is unclear.
The video feed is shut off at this point, presumably with officers evicting TelexFree affiliates from the company offices shortly thereafter.
As this is a breaking story, please check back for updates as they occur (the comments below are a good indication of the current situation).