Police investigate TelexFree for money laundering
With TelexFree expected to file a formal appeal against the injunction that has effectively shut down the business in Brazil, news broke today that police in Acre are now investigating the company for possible money laundering activity.
The Acre division of the Specialized Police in Combating Organized Crime Taskforce (known as DECCO), announced yesterday that they had
opened an inquiry into whether the management of Telexfree committed crimes against the economy and money laundering, among other crimes.
The inquiry investigation marks the second criminal investigation into TelexFree that is publicly known. The first being initiated by the Brazilian Bureau of Consumer Protection, which resulted in the detection of ‘evidence of crimes‘.
The opening of the police investigation, made at the request of the Special Action Group for Combating Organized Crime (GAECO) of MP-AC means the entry of the criminal sphere organ in these investigations.
Also revealed in the iG news report was the conclusion of the previous criminal investigation into the company. After the Bureau of Consumer Protection forwarded their findings to the Ministry of Justice and Finance, the Bureau of Defrauding opened up a case which resulted in the request of arrest warrants for certain “members” of TelexFree.
For reasons not clarified in the iG report, these arrest warrants were denied by a judge.
Meanwhile, rather than defend the business model (which has failed twice now in Acre’s courts), TelexFree appear to be getting a bit more creative with their defense.
Quoted in the iG article, TelexFree’s lawyer Horst Fuchs attempts to confuse MLM with Ponzi schemes, declaring that ‘if the state wants condemn [ multilevel marketing activity ], they need to establish in law what can and what can not be done‘.
What can and can’t be done? Oh I dunno Fuchs… how about be we start with the obvious – thou shalt not run Ponzi schemes?
Affiliates of TelexFree in Brazil also appear to be at a loss to defend the Ponzi scheme business model, calling on their fellow affiliates to instead write letters to the Acre civil court, declaring their “satisfaction with the company” as a reason to reverse the injunction.
Underscoring all of this however is the core principle that a Ponzi scheme cannot pay out more than it brings in. With recruitment of new investors still occurring, affiliates in Brazil appear to be of the belief that the company was not in financial trouble.
Buried deep within the financial paperwork belonging to the company however would be a balance sheet revealing how much money was put in and, more importantly how much is owed to every TelexFree affiliate.
TelexFree take in $299 from affiliates and promise a weekly “guaranteed” $20 ROI. Simple math dictates a flawed Ponzi business model.
Meanwhile TelexFree’s affiliates in the US seem content to ignore what is going on in Brazil. It was recently announced that the company would be holding a “TelexFree Super Weekend” over at NewPort Beach in Southern California on July 26th and 27th.
Join “The Haves and The Have Yachts” with a 100 Percent TelexFREE Smile on Your Face and a Shine on Your Dancing Shoes.
Dinner, Dancing, DJ, Monopoly Money Casino Tables, Cash Cocktail Bars – This Is A Harbor Cruise That YOU Don’t Want To Miss!
Evidently the irony of having prospective and existing affiliate investors play on Monopoly money casino tables is lost on the event organisers.
Items on the Super Weekend agenda include an investor recruitment drive business presentation, business training and leadership cruise.
Organisers are charging attendees $40 to attend and an additional $100 if attendees wish to participate in the “harbor cruise”.
With TelexFree’s business operations unlikely to continue in the face of multiple criminal investigations and a criminal case expected to be filed by the Acre Public Prosecutor’s Office by the end of next month, US-based affiliates are most likely all too painfully aware that relying on recruitment drives in Brazil (TelexFree’s largest affiliate investor pool), is no longer a valid TelexFree investment strategy.
So who do they now want to pay for their promised Monopoly money returns…?
Grab a mirror and open up your wallets folks.
Criminals Beware, Fraud Investigators Take To Social Media.
Time is the great equalizer…it promotes, and it exposes…hide those yachts!
http://www.forbes.com/sites/walterpavlo/2013/06/25/criminals-beware-fraud-investigators-take-to-social-media/
Question?
Oz, the Judge issued an injunction prohibiting Telexfree to recruit new members and pay for the ads all over Brazil and the world! Why here in the USA they still continue to recruit new members? When this really going to end?
The company in the US is separate from and distinct from the company in Brazil, according to US leaders.
Source, 26.06.2013:
telexfreeunitedstates.com/telexfree-updates/
I have posted the quote in another thread yesterday, and it has also been posted in the MMG forum page 37 or 38.
The situation in Brazil is rather chaotic, but TelexFree has clearly collapsed there.
Here’s the quote:
Somehow it doesn’t make any sense to me that Telexfree in Brasil and the USA are different from each other!
Telexfree can be fined £ 6m by the Ministry of Justice
Vitor Sorano – iG São Paulo | 28/06/2013 12:35:31
http://economia.ig.com.br/2013-06-28/telexfree-pode-ser-multada-em-r-6-mi-pelo-ministerio-da-justica.html
I only gave him a POTENTIAL answer, using TelexFree itself as a source, i.e. “according to US leaders”.
The organization in Brazil has collapsed completely, but the organization in the US hasn’t been directly affected yet, e.g. payment processor freezing or anything like that.
It MAY potentially be affected in that way within a couple of weeks, but I know too little about the injunction itself (and about how the business is organized in the US) to give any clear answers.
Telexfree removing the credits of “promoters”: (Brazilian Portuguese):
http://g1.globo.com/espirito-santo/noticia/2013/06/delegacia-registra-ate-3-ocorrencias-por-dia-contra-telexfree-no-es.html
I have a strong feeling that certain telexfree higher ups have been stealing these peoples credits and in turn blaming the loss on the affiliates saying they gave out their passwords!
Looks like telexfree is going to have a lot of explaining to do in the next while coming.
Just a remind for people who still believe in this kind of company:
Management in Brazil are banking on getting an appeal passed, as unlikely as that seems.
Failing that, I’m pretty sure you’ll see them go into panic mode and close up shop globally. Brazil was their biggest investor recruitment market.
Also I don’t imagine it’d be long before the SEC or an AG in the US moves in following a guilty Ponzi verdict in Brazil.
Now have petition from “promoters”:
“I pay the school of my kids with Telexfree”
(Ozedit: link removed, signup required)
I forgot to mention one thing. They want one billion subscriptions 😛
It’s official, it became a cult. “We are 100% Telexfree” they shout.
Judge who froze Telexfree accounts receives death threats:
http://economia.ig.com.br/2013-06-29/juiza-que-bloqueou-pagamento-da-telexfree-e-ameacada-de-morte-diz-mp.html
Death threats?
Bloody hell Brazil, at least take your Ponzi losses with some dignity.
Unfortunaltely, judges receiving death threats is somthing relatively common in Brazil. There’re notorious cases of judges who, after having convicted big drug dealers, now have to be followed by bodyguards everywhere they go, and several judges have actually been killed in the last years for making decisions that “rich and powerful people” “didn’t like”.
I know that, for you, it sounds like somthing from other planet, but for us, it’s a sad reality
I did tell you guys about the Grupo DMG Ponzi in Colombia where people go on hunger strike for David Murcia, right? “We believe in God and David Murcia”, they chanted, when Grupo DMG was closed down in a huge raid across the country along with a dozen other Ponzi schemes.
They said the SAME THING: that it’s a good thing, they’re paying their kid’s education and all that, it’s the only GOOD thing in life they got, etc. etc.
Oz, could you please edit my laast comment to correct the misspellings I commited?
Now, Telexfree leaders say that government, justice and media are all bought and biased against Telexfree and starting campaigns to make affiliates send emails to all government agencies, TV channels, newspaper, courts telling them to leave the company alone.
Of course. Because Telexfree break the system. Everybody can be rich!!! 🙂
One can only guess the volume of money laundering going on with the way participants are able to switch moneys to one another. You can bet there are countless amounts of people who have accounts open in there name without knowledge or consent.
with all of the telex posts, big thanks for the great, really great reporting! thx all!
Its a world wide phenomenon! To those at the top of this and other pyramid programs…..Everyone is elated until the shoe drops and then someone gets hurt, those hurt are really hurt as are many (most/all) their associates (family, friends) “Sustainability” is vital to survival in everything…”sustainability” is something that is engineered into the design then its vigilantly monitored. The DNA of telefree condemned the program to serve a few fast movers at the expense of many…’Timing Beats Talent’ right!?..right. I’ve seen many of the Zeek/telexfree/PS/BTG leadership say from the stage & on the calls that we should all ‘Be the CHANGE you wish to see in the world’ and also ‘The rain drop never knows its responsible for the flood’ and then they recruit their next door neighbor or brother-in-law into a deal like this (with all this negative press flying around) and then wonder why so many feel burnt by MLM, that stink is now all over the DSA…Keep your streets clean MLM’ers or the regulators will do it for you–We believe in God and David Murcia? http://www.nytimes.com/2009/01/31/world/americas/31murcia.html?pagewanted=all&_r=0
I understand, but it can really happen, because in brazil, some peoples sold their house, their car to put money in telexfree, so now they lose all, these people can be crazy!
My papa taught me at a very young age to never put all my eggs in the same basket.
Some persons in Brazil do this and put in BBOM, Multiclick, Priples, Blackdever, e-mai.net, NNEX, Universal Private Bank and more…
Years ago (2006-2007) had the many scams in Brazil with “VoIP” called TelExtreme, Telmaxi, PhoneClub/FoneClube.
Now have many Telexfree promoters offering “international accounts” – they say is from – Telexfree from USA, Portugal, England for the people don’t receive the money in Brazil.
And what products have THOSE branches sold to generate that sort of revenue? Hmmm?
Those guys are playing the faux jerks / saviors, saying just what some sheeple want to hear.
There’s a story in the Freaknomoics podcast about jerks (I’ll put URL at the end). One of the best rated professors has a story…
When the students complained that the class notes were not 3-hole-punched (so they clip into 3-ring binders more easily) he pretended to go down to the copy shop and chew out some nameless copy drones, but in reality he hid in the teacher break room for 15 minutes.
Then he went back to class and announced that he threatened to get the copy drone fired if they EVER forget to 3-hole punch the class notes ever again. In other words, he pretended to be a jerk to non-existent people in order to raise his standing among the students.
Those TelexFree promoters are doing something similar: creating **** to impress their audience.
http://www.freakonomics.com/2012/07/19/legacy-of-a-jerk-full-transcript/ (search for “faux jerk”)
Or to put any eggs in leaky baskets. 😉
People all over the world, in every country, Americans, Chinese, Russians, Latins, Europeans, do the same, look for the next money game, passive on line program, the ones that tarnish the DSA, MLM, and Affiliate Marketing.
Hyped up easy, do nothing cash is what everyone is looking for.
They ALL end, you lose more than your money, your reputations, and worse, you hurt people by pulling them in with your hype and getting them to lose their money.
Wake up people, choose the right company, don’t quit your day job and build, 1 distributor at a time and your business very well may grow you a real monthly income.
Wanting it fast and looking for the next best thing is the worst choice you can make in your quest for earning income on line.
Telex is another notch in the belt for this money game niche.
The sooner its buried, the better.
To the people who sold their property, a harsh lesson learned, to the Faith Sloans and Randy Crosbys of the world, shame on you, and to the creators of these schemes, get ready to lose the illegitimate money you have collected and your families when you join Bernie and David in lockup
Second appeal was filed on Friday:
Not sure if that means a decision will be reached on Monday but I imagine we’ll hear more early next week Brazil time.
http://www.tribunadabahia.com.br/2013/06/29/telexfree-faz-nova-tentativa-de-derrubar-liminar-que-bloqueia-pagamentos
This appeal will be analyzed by three Acre High Court judges. One of those judges is the same who refused the first appeal. The analysis of the appeal is not scheduled to Monday, but the judges can analyse it in any day they want, independent of scheduling.
Tomorrow night, a report about Telexfree and the suspicions of Ponzi Schemes will be broadcasted in Fantastico, a 60-minutes style program, that’s watched by 50 to 60 million Brazilians every week.
So, Telexfree top leaders are telling their downlines to make phone calls and send emails to the TV Station urging it not to show the report. Even demonstrations in front of the TV satation have been organized by Telexfree members
Good reporting! All of these comments are fascinating.. I am curious as to why behindmlm.com appears to be the only MLM blog that is reporting!
Why is Troy Dooley silent? I am new to MLM blogs so please excuse my ignorance.
That would just mean even MORE people will be watching it. Clearly they never heard of the “Streisand Effect”. (look it up on Wikipedia)
TelexFree never had much of a presence in the US, aside from allegedly hiring Gerald Nehra (allegedly a buddy of Dooly).
Dooly is busy touting his interview with Brian Underwood of Rippln where he claimed to have dragged out a bit more details about the Rippln thing. (Talk about Rippln in its own post please)
in fact, everything indicates that they bought an extremely small American VOIP company just to be able to say that Telexfree already exists since some years ago and that it’s multinational(it really works to impress people in developing/emerging countries).
In Brazil, if you say that “it’s US based” most people will think “if there was something wrong, they’d have closed the company there, because their regulations are much better than ours”. This “argument” is oftenly repeated by Telexfree members
If you don’t know, many people in Brazil (and other countries in the same stage of development) think about the US as a place where problems almost don’t exist, and everythig is perfect.
We call it that inferiority feeling “vira lata complex”(“vira lata” is a term used to describe the dogs who don’t have owners, and turn garbage cans looking for food)
I don’t know why but I think the TV station (Globo) canceled the transmission about Telexfree, probably waiting the final of all this.
*The TV removed the video from them website: globo.com/fantastico
The video is on Youtube:
The Brazilian is right. The telexfree “promoters” always say “it only happens in Brazil. In more then !60! countries Telexfree is legal. The judge is ignorant!”.
We have a different type of audience, contributors rather than readers. We’re not bound to the “expert” role, we prefer to avoid it. 🙂
It’s actually as easy as that. Define it to be “international” or “world wide” already from the start, and let the audience gradually find you in different countries. Cover a wider range of audiences, so you’re not only attracting “Good work!” comments. And other similar ideas, but they are mostly vaguely defined.
One sample definition:
“The basic idea is ‘sharing information’, and providing a platform for doing it”. A definition like that is much more flexible than any “expert author” role you will find in most blogs. And it’s much easier to live up to an idea like that. 🙂
That should have been “simple” rather than “easy”. The idea is simple, not easy.
Troy is an “MLM Advocate”, we are mostly considered to be critics, i.e. the audience will often balance itself in that direction.
Troy has connections to MLM leaders, MLM companies, MLM lawyers, etc., “professionals” rather than “ordinary people”. He’s simply writing from another viewpoint and is using other types of sources. But we’re balancing each other, posting comments on each other’s blog, citing articles in both directions, and so on.
I believe Troy initially had intentions of building up “MLM resources”, a wide range of educational articles about sale, marketing, branding, leadership, and so on, i.e. branding himself as an “expert in all MLM related topics”. We don’t have any intentions like that.
Yet it took several YEARS to close down Zeek… And its members are touting “14 year history” (which isn’t, Zeek’s only around since maybe 2010)
The English term you’re looking for is “feral”.
http://dictionary.reference.com/browse/feral
The problem is “presumed innocent” doesn’t really applies to a business. They are welcome to delude themselves in looking for something to blame. Looking at American cases like Ad Surf Daily and Zeek Rewards shows much denial when both were shut down and months later. Ten months later, some Zeek members are STILL claiming SEC was wrong in shutting down Zeek. It’ll take a while for Brazilian victims to “get over it”.
It officially launched January 21 2011.
https://behindmlm.com/companies/zeek-rewards/the-origins-of-zeek-rewards-a-125-roi-guaranteed/
Thanks. I sorta counted its predecessor, FSC Auction.
In Brazil the “inferiority complex” is high. See the Harvard University for example: they have many ads “without cost” in several Hollywood films and for many people it’s like the only “good” university around the world. (many brazilians would love to study there, they admit, “because I see in the movie”).
And for MLM isn’t different. They say the best of MLM is USA and Harvad have courses for this. And it “of course”, make the USA the biggest country of the world.
Now have other: they say VoxBras (the only *one* state – Espírito Santo – company) is competing with the BIG companies in Brazil. “The government and press” don’t like the people changing the life with more money.
Which would be fine, except Harvard DON’T have courses in MLM.
They discuss the MLM model as part of their business courses, but they definitely do NOT have standalone MLM units as part of their curriculum.
the report about Telexfree was broadcasted few minutes ago. images of the demonstration against the TV station and affiliates saying that they are “satisfied” with Telexfree were included in the report
Now the “promoters” are praying for god of them called “Christ Jesus” and “Carlos Costa”.
Cult like practices in the open view. You don’t see that everyday.
I would appreciate if someone could put up an English translation, so the rest of us could understand what they were saying on that fantastico report.
That’s a false rumor. Harvard Business school does NOT teach network marketing. HBR may have published some “case studies” on network marketing companies.
http://www.pinktruth.com/mary-kay-facts/not-taught-at-harvard/
Standard denial thinking… blame a amorphous entity as the “bad guy” that can’t “defend” itself through individual arguments. Blame God. Blame politics. Blame some other country. Blame “evil”. Blame the cartel (what cartel?). Blame somebody EXCEPT those actually at fault because admitting to fault would be a “weakness”.
Seen it many times before in various OTHER scams, including TVI Express and Zeek Rewards (even today there’s people who claim that Zeek was closed because it’s threatening the “big boys”).
Turn on closed captions, then translated captions. Google auto-translate is pretty atrocious, but you get the general gist of it.
TelexFree apparently is a pretty lousy phone company, having a SURGE of complaints at a Brazilian consumer complaint website recently. And its members are ‘we believe in TelexFree’, ‘if it’s a scam there should be more people complaining’, and so on and so forth.
One question:
Doesn’t Brazil have “Ponzi scheme” definitions?
Most reports are focusing on the “financial pyramid” part of the business, e.g. showing several laptops in a pyramid structure, drawing pyramid structures on a white board, and so on.
TelexFree IS a financial pyramid too, but first and foremost a Ponzi scheme. It could have worked without the recruitment scheme, but I seriously doubt it could have worked without the $20 per week Ponzi payouts.
Ponzi is about creating an ILLUSION of something being profitable, to attract money from investors or income opportunity seekers.
Pyramid is about paying participants for …
* participants they introduce themselves
* participants introduced indirectly by them
* participants introduced by others (e.g. spillovers)
* reentries of old participants in a position under themselves (e.g. at the bottom of the system)
TelexFree could easily have worked without the pyramid scheme part, but it will add extra income to the active recruiters among the early investors. But it wouldn’t have been any problem having a centralized recruitment system either, e.g. a webshop where people can order AdCentrals.
Pyramid schemes are difficult to prove. Fraudulent investments are normally easy to prove, if they have any laws against it.
I know about closed captions but not all the videos posted here have that option available.
Subs would be much better option, and we could translate them in other languages, to show what happens when people desperate for money (like people in Brazil) join up with MLM business opportunities, which turn up to be blatant ponzi/pyramid schemes.
Just to be clear, I have no intention in ridiculing Brazilian people. They are not the only ones that sold a house, went into debt, used all their money, hoping that will make them rich beyond belief.
It will require too much work and time. The videos are not about the content itself, but about HOW the case now is being covered in Brazilian news. Instead of writing about e.g. “Fantastico had an investigative report”, he’s SHOWING it to us, to give an IMPRESSION of what that report was about.
I’m sure you can ask questions, e.g. “Can you give us a quick overview for the Fantastico report?” or “What was that specific interview about?”. But people will normally throw stones at you if you ask them for too much, e.g. “Can you please spend 5-6 hours translating the whole video?”. 🙂
Someone pass me the popcorn.
Transcription in Brazilian Portuguese: http://g1.globo.com/fantastico/noticia/2013/06/justica-ve-indicios-de-piramide-na-telexfree-e-determina-investigacao.html
The movies almost over, thankfully, but the popcorn’s quite good.
Unfortunately the big press is doing a bad job about Telexfree. In my opinion all the lies (Mapfre, “10 years in the US”, “headquarters in the US”, more than 1,5 million of “promoters” only in Brazil – they receive minimum of 10 “accounts” in Adcentral, of course, in practical they have the minimum of 15 million of customer only in Brazil and 90% of “promoters” don’t know about VoIP – instead this uses Skype or Google Hangout) is more important than Ponzi scheme.
The lies *are* what’s keeping the Ponzi schemes alive. The promoters are justifying, in their own minds that the Ponzi scheme’s legal and viable by ignoring facts that doesn’t support their “theory” of how life works (i.e. I’m selling real services, not recruiting people into a Ponzi scheme).
Anybody who doesn’t support that idea is labelled “enemy” and insulted / ignored, and that includes government, law, logic, etc.
Don’t forget our government lies too. Look at all the scandals listed:
http://en.wikipedia.org/wiki/List_of_federal_political_scandals_in_the_United_States
Yes, but this is a scambusting site, not Wikileaks. 🙂 We don’t aspire to be Assange or Snowden. 🙂
Gotcha 🙂
See this photos: http://fotojornalonline.blogspot.com.br/2013/06/protesto-contra-globo-reune-3-mil.html
“I remember when,
I remember,
I remember when I lost my mind…
Maybe I’m crazy
Maybe we’re crazy
Probably”
Crazy – Gnarls Barkley
Globo didn’t show anything that hasn’t been discussed here already. They showed a guy driving a $100.000,00 bmw bragging that in 8 months hes made $1.1 million, so he treated himself to the car.
Another scene shows a hidden camera interview with a promoter admitting it being a pyramid. In another shows a school teacher complaining she lost $5.00,00 she borrowed and because of the court order she cant get it back.
Everybody knows its a scam, but money is being made so screw it. Telexfree is fast becaming a religious experience, throwing Gods name and Jesus left and right.
Brasil is full of such scams. Even Carlos Costa is worrying about TF people joining the other scammers. PLANTAO TELEXFREE N.08 is about that event, where he claims a personal friend was talking to him about joining the competition (I watched it on youtube yesterday but cant find it today?!).
Anyway, the report also says the site for complaints online in Brasil, (RECLAMEAQUI.COM.BR) has gotten over 7.000 complaints, mostly about money not being deposited and a lack of customer support by TF.
PS: I forgot to mention that also showed a conglomeration of TF’ers complaining about Globo’s report and claiming to be 100% satisfied customers. They say they are 1 million strong spread all over Brasil.
Everybody is happy in a Ponzi scheme until the money runs out.
How dare the regulators step in before that happens…
I hear you.
I updated the MMG forum about it 1 or 2 hours ago. It has a different type of audience, both TF members and non-members, mostly interested in the Court case and how it potentially can affect TelexFree in other countries.
Sorry, it was PLANTAO N.7:
Here he’s explaining to to whoever wants to listen, why it makes more sense to renew (20% fee) your contract with TF, rather the joining a newer and different company.
Pyramids are the newest and upcoming way of making money in the 3rd world.
A new business has emerged and it’s Insurance for ponzi investments, how’s that for a laugh.
The newest line being fed to Telex affiliates, their original investment is insured by Liberty Ins. co. What will they think of next.
Telexfree presented a new appeal, now on “Superior Tribunal de Justiça” in Brasilia
http://www.stj.jus.br/webstj/processo/justica/detalhe.asp?numreg=201302147994
And a funny thing: Telexfree affiliates posted a petition in Avaaz(written in a terrible way and with a lot of spelling mistakes) trheatening to sue the judge for preventing them to gain their money
http://www.avaaz.org/po/petition/Cancelamento_imediato_da_liminar_proferida_contra_o_funcionamento_da_Telexfree_inc/?pv=23
unitl this moment, more than 20000 people sgned the crazy petition.
They also spammed National Justice Council eith 30000 complaints against the decision. The council answered that it’s not their function to analyse or revoke decisions, they just investigate cases of administrative or disciplinar violations committed by judges or other people who work in courts.
I just received the following notice along with a copy of this weeks payout from Telexfree (I am being told that the check (actually, its a copy of the ACC deposit to this knucklehead personal bank account) of $25,001.00 is supposes to be payment for 3 weeks effort in Telexfree.
This person is exactly what is wrong with the business and why the business will become so soon over regulated. Also, he sent me the following: