telexfree-logoFollowing a contempt hearing on September 30th, the court directed Sann Rodrigues to file a Memorandum in Support of why he shouldn’t be held in contempt.

Previously Rodrigues’ attorneys had argued that he couldn’t speak English, and therefore didn’t understand the asset freeze order in place.

The SEC declared that argument “nonsense“, with footage of Rodrigues speaking English proving otherwise.

In a memorandum filed earlier today, Rodrigues appears to have dropped the whole “me no speak English” schtick.

Instead, Rodrigues is now arguing that providing the SEC with the requested detailed accounting records might incriminate him in related ongoing investigations.

Rodrigues’ memorandum addresses three primary points, as directed by the court at the September 30th hearing:

1) why Mr. Rodrigues should not be held in contempt,

2) whether Mr. Rodrigues waived his Fifth Amendment privilege against providing self-incriminating statements by virtue of the June 10, 2015, Order to Provide Accountings and Carve Out as to Sanderley Rodrigues; and

3) if Mr. Rodrigues is found to be in contempt, then what punishment is sufficient to remediate the situation.

Accordingly, we’ll cover the three points in line with the filed memorandum.

Why Mr. Rodrigues should not be held in contempt

The fifth amendment is evoked here, with Rodrigues attorney’s claiming he

has provided an Accounting (to the best of his ability without subjecting himself to additional criminal liability.

As to explaining why Rodrigues violated the freeze order prior to only recently having provided the SEC with accounting, his attorney’s are using the “dog ate my homework” excuse.

The April 23, 2014 Order and the Order Extending TRO do not indicate that they were served on Mr. Rodrigues, who was pro se at the time.

After inquiry of Your Honor’s chambers, there is no evidence that the Order Extending TRO was ever served on Mr. Rodrigues.

Unless the SEC can show by clear and convincing evidence that Mr. Rodrigues was provided with notice of the April 23 Order and the Order Continuing TRO, Mr. Rodrigues cannot be held in contempt for any alleged violations of the Order Continuing TRO.

Whether the order was served I have no idea, ditto whether or not that’s even a valid legal argument.

At the very least though, being fully aware of the of the SEC’s TelexFree complaint and representing himself, it is Rodrigues’ responsibility to follow the case.

Claiming ignorance by one’s own (lack of) conduct is surely not a defense against contempt?

And let’s not kid ourselves, Rodrigues wasn’t sitting at home twiddling his thumbs.

Immediately following the SEC’s TelexFree action, Rodrigues began setting up iFreeX. This was accompanied by numerous (now deleted) Facbook posts advising that Rodrigues was “ignoring haters and getting on with business”.

Rodrigues on numerous occasions advised his Facebook following to do the same, with iFreeX going on to launch in late 2014.

Rodrigues, rushing to launch his next scam, obviously didn’t have time to keep up to date with proceedings against him.

Because each of these alleged transactions was made without knowledge that the TRO had been extended, such activities were not done willfully and there cannot lawfully be a finding of contempt based upon these allegations.

Thus, there is no remedial purpose in incarcerating Mr. Rodrigues.

Or who knows, maybe Rodrigues was served and a dog really did run off with the asset-freeze notice before he had a chance to read it.

Mr. Rodrigues waived his Fifth Amendment privilege against providing self-incriminating statements

Argue Rodrigues lawyers,

Invocation of the Fifth Amendment privilege against self-incrimination requires a showing that the statements are testimonial (including acts of production), that the testimony is compelled, and that the testimony poses a real danger of criminal liability.

They then go on to all but admit that Rodrigues has been engaging in criminal activity:

In the case at hand, Mr. Rodrigues has the right to invoke his privilege against selfincrimination where he has been ordered to provide a written explanation of his financial affairs and history of financial transactions, which is testimonial and presents a real danger of additional criminal liability.

As this Court is well aware, there is a parallel criminal action alleging wire fraud against two of the defendants in
this action (TelexFree).

The undersigned has also been informed that another business venture Mr. Rodrigues is involved in is being investigated by the Massachusetts Attorney General.

Disclosure of Mr. Rodrigues’ financial affairs has a real danger to implicate him in that action as well.

No doubt the DOJ will be paying attention to that statement, which can essentially be boiled down to “an explanation of Rodrigues and financial affairs will reveal criminal activity”.

Do note though that at the time of publication, Rodrigues has not been charged criminally for his involvement in the various scheme’s he’s been promoting.

The only standing criminal charges against Rodrigues pertain to unrelated visa fraud.

Meanwhile I suspect the “business venture” referred to above is either iFreeX or DFRF Enterprises.

As to whether Rodrigues has already waived his Fifth Amendment right;

The SEC contends that Mr. Rodrigues may have waived his Fifth Amendment privilege by virtue of consenting to Plaintiff’s Assented-To Motion to Modify Preliminary Injunction Order.

Rather than argue as to why Rodrigues hasn’t waived his right, his attorneys instead claim

it is (the SEC’s) burden to establish that a waiver occurred by a preponderance of the evidence.

(The SEC) has failed to meet its burden of showing that Mr. Rodrigues waived his Fifth Amendment privilege against self-incrimination by allegedly promising to provide an accounting.

As to the accounting Rodrigues submitted, which the SEC assert constitutes a waving of the Fifth Amendment, his attorney’s argue

disclosing some financial information does not impair his right to invoke the Fifth Amendment as to information that was not previously disclosed by Mr. Rodrigues.

This, Rodrigues’ attorneys claim, is because the information contained in Rodrigues accounting does not contain any incriminating facts.

Whether prior testimony or statements waive a person’s Fifth Amendment right against self-incrimination depends on whether the previous disclosures have already reveled the incriminatory information.

Though Mr. Rodrigues previously provided an Accounting, he has not disclosed any information therein that would be incriminating and has thus not waived his privilege against self-incrimination.

No doubt this will be addressed by the SEC in their yet to be filed response.

If Mr. Rodrigues is found to be in contempt, then what punishment is sufficient to remediate the situation

The basic argument here is that sending Rodrigues back to jail, does not fit with

civil contempt (being) imposed to coerce present or future compliance with an order of the court.

Rodrigues lawyers acknowledge that the SEC are currently seeking to clawback from Rodrigues

  • proceeds from JPMorgan account
  • proceeds from Sale of Mercedes
  • proceeds from transfer of Ferrari
  • that properties held by J&K Investments LLC are transferred to Five Star and
  • a declaration from Mr. Rodrigues that he controls and owns Five Star (after which the SEC would move to seize the properties)

As an alternative to sending Rodrigues to jail until he complies with the above, his attorneys have proposed he

offer to reimburse the SEC in the amount of $12,100.00 based on the aforementioned withdrawals.

As to the three real-estate properties Rodrigues sought to hide from the SEC, his attorneys argue that transferring the properties back to Five Star is currently “impossible”.

Counsel for Mr. Rodrigues contacted Joel Nunez, who is the managing member of J&K Investments LLC to request
that Mr. Nunez return the three properties that it received from Five Star. Mr. Nunez refused to do so.

Joel Nunez holding Rodrigues’ properties for him drags Rodrigues further into the MLM underbelly, further tying him to DFRF Enterprises.

Previously it was revealed Rodrigues had only pitched DFRF Enterprises to potential investors.

As per a declaration by Nunez filed on October 7th:

I have been asked by Mr. Rodrigues’ attorneys to voluntarily transfer the three properties back to Five Star.

Because of the amount of money that Mr. Filho owes me, the amount of money that I paid Mr. Trinidade for them, and because the properties were given to me by Mr. Filho as payment on that debt, I am unwilling to do so without being fairly compensated.

Rodrigues attorneys then asked Nunez to pay the “fair market value for the three properties”, but he declined for the same reason.

DFRF Enterprises meanwhile was a $22.8 million dollar Ponzi scheme. The SEC shut DFRF down in early July, with Founder Daniel Filho arrested by the FBI a few weeks later.

In addition to civil charges brought about by the SEC, Filho is currently facing criminal charges in relation to three counts of wire fraud.

Whether or not the SEC will launch separate civil action against Nunez and proceed to seize the properties in question, remains to be seen.

One interesting point Nunez declaration brings up, is that Rodrigues sought to launder assets through DFRF between the SEC shutting down TelexFree in April, and Filho approaching Nunez about Five Star in mid-May.

Why would Rodrigues seek to hide his assets if he was truly unaware of the asset-freeze entered against him?

Palming off one’s realty holdings to a third-party, for nothing in exchange, is hardly activity to be engaged in out of the blue…

What Rodrigues’ attorneys are asking for

Sanderley Rodrigues De Vasconcelos respectfully requests this Honorable Court:

(1) Deny the Plaintiff’s Motion for Contempt; or in the alternative

(2) Stay proceedings until the resolution of the pending parallel criminal case; or

(3) Find that the Defendant is in Contempt for only those transactions occurring after Mr. Rodrigues was served with the TRO (April 18, 2014) and before the Order Extending TRO was entered on April 25, 2014 and impose a purge sanction in the amount of $12,100 to be paid to the SEC within 30 days.

(4) Order any other relief that is lawful, just and equitable.

The SEC have been given until October 14th to file a reply to Rodrigues’ Memorandum, after which it’s expected a hearing date will be set.

Stay tuned…


Footnote: Our thanks to Don@ASDUpdates for providing a copy of Sann Rodrigues’ October 7th “Reply Memorandum Of Law As To Why He Should Not Be Held In Contempt”.