Rwandan TelexFree affiliates mull legal action
In contrast to US TelexFree affiliate leaders busying themselves censoring social media groups of factual information and demanding artificial positivism from those who invested under them, Rwandan Telexfree affiliate leaders are considering legal action against the company.
The news comes as yesterday Rwandan affiliates called on their government to intervene and recover losses incurred by Rwandan TelexFree affiliate investors. Estimates peg the total amount at stake is 44 billion RWF, or $65 million USD.
Unfortunately, as in every country TelexFree operated in outside of the US and Brazil, the company has no assets for the Rwandan government to seize.
When contacted, Emmanuel Hategeka, the Permanent Secretary in the Ministry of Trade and Industry, said it was difficult for government to intervene.
“If the company had assets in the country it would be easy for us to seize the assets and compensate the members but now I don’t think they had assets here. What we can do is only to look into the contractual framework between the company and members and advise accordingly,” he said.
TelexFree’s global operations sucked money out of some of the poorest nations on Earth, dumping the funds into the pockets of its top US and Brazilian based affiliate leaders.
Upon previously trying to trace funds leaving Rwanda, officials reported that they had tracked at least $10.2 million USD that had been transferred out of Rwanda and laundered through TelexFree bank accounts in Germany and the US.
Subsequently Rwanda moved to ban the scheme, with Rwandan regulators accusing TelexFree of ‘laundering money, evading taxes and exploiting Rwandans to the benefit of its foreign owners‘.
In light of the advice given to them by the government, Rwandan affiliates are now exploring other options. The New Times reports,
Furious (TelexFree) members had earlier appealed for government’s intervention after the US based company filed for bankruptcy under the US Bankruptcy Code, to address certain operational challenges.
The Bankruptcy Code prohibits creditors from taking certain actions related to debts prior to the commencement of the Bankruptcy Cases.
Some members who spoke to this paper yesterday said local and foreign lawyers are being lined up for a legal battle.
“We want our money back. Our local and foreign lawyers will advise us accordingly,” James Gihana, a Rwandan investor and former member of TelexFree said.
Jean Nepomuscene Mugengangabo, a commercial lawyer at Bona Fide Law Chambers Advocate in Kigali, said it was possible for the members of the former TelexFree to sue the company by either going through the US embassy or travelling to US to file a petition there.
“It is possible to get back their money as long as they are sure about the mother company in US,” he said.
He also said that the victims had an option of suing the company in Rwanda and then transfer the case to US courts later.
I’m not too sure on the accuracy of Mugengangabo’s suggestions, but the reaction from TelexFree’s international affiliates is certainly interesting to follow.
Without divulging details, Gihana said the decision was reached with other members from various countries.
It would appear that affiliates in other countries are also gearing up to launch action against TelexFree.
Meanwhile, as I mentioned earlier, US-based TelexFree affiliates remain hopeful that the company will restart business operations and continue to pay them a passive weekly ROI.
In the TelexFree social media groups I’m tracking, I’ve seen dozens of instances of factual information and concerns raised by TelexFree affiliates censored over the last few days.
I’ve also seen instances of moderators of these groups threatening TelexFree affiliates with a ban and communication cutoff if they dare to post anything negative against the company. This includes the sharing of news reports, resulting in an effective information blackout in many such groups.
All that remains are posts from disillusioned affiliates promising a prompt restart of TelexFree’s business operations, claims the company was swimming in money and can pay everyone their initial investment back, religious sermons calling on God to intervene and the shouting down of anyone who dares to suggest TelexFree affiliates who lost money have been scammed.
Stay tuned…
Carlos costa say a lot of thing and DON’T SAY ANYTHING!!!
They can’t mathematically prove we are pyramid!!
hahahahah!
Given that mathematics plays a large role in determining whether or not something is a pyramid scheme, that’s quite possibly the stupidest thing Costa has said to date.
“They can’t prove we used eggs to make this omelette!”
Isn’t that brass trophy behind him the same one that was behind Labriola in one of his staged videos?
I think those are the trophies TelexFree awarded its own management at their “best MLM company of the year awards” in Madrid earlier this year.
This banning on facebook and other sites for questioning the legitimacy of the company has been going on for months now!
It’s really interesting to watch this unfold; I’ve seen exactly the same thing happen with so many companies in the last 10 years! What’s that expression about the 5 stages of death?
these folks are unbelievable!
The Rwandans should probably look at the Zeek Rewards case so they don’t spend money on useless lawsuits.
I posted SOME information in another thread earlier today (link under the username):
I provided that info to make it easier to communicate potential solutions. The post has links to a collection of court documents from an ongoing case = Zeek Rewards, shut down by SEC in August 2012, with related class action lawsuits that have been stayed, with related clawback actions and criminal cases.
More information to Rwandans …
Source:
http://www.forbes.com/sites/jordanmaglich/2014/04/17/sec-halts-telexfree-pyramid-scheme/#./?&_suid=139776517483701216957454347476
Forbes’ expert author, Jordan Maglich, operates the blog Ponzitracker.com. He will usually cover a case when authorities already have intervened and shut down a Ponzi scheme.
A Receiver will have some more functions than a bankruptcy Trustee, but they are both court appointed administrators.
More from that article:
“Massive pyramid scheme” may mean that it will be handled differently than a Ponzi shutdown. I’ll guess it will be “disgorgement of ill-gotten gains” rather than clawbacks, from the top winners rather than from the whole group of net winners.
It’s too early / too little information available to draw any conclusions, but I’m pointing out the differences anyway.
More information to Rwandans …
The SEC file “illegal pyramid scheme” case against TelexFree article from today cover the SEC complaint.
Some differences from the shutdown of Zeek Rewards:
* 4 top promoters are named as defendants
* the shutdown is involuntarily
* Zeek was an “emergency shutdown”, while the company still had $225 million in bank accounts.
In Telexfree, $300 million seems to be missing, based on the initial report.
More info to Rwandans …
Don Ryan / ASDupdatefiles have added a group of court documents for TelexFree a few hours ago.
https://sites.google.com/a/asdupdates.com/files-website/sec-v-telexfree-inc
As a general advice, I will recommend collecting information BEFORE making decisions about lawsuits. There’s a big difference between suing a legitimate company and suing a fraudulent one that has been shut down.
More information to Rwandans and others.
“How can investors get their money back?”. It has a description of bankruptcy proceedings.
http://news.jornal.us/article-681066.TelexFree-Bankruptcy-How-Can-an-Investor-Get-Their-Money-Back.html
Currently the best idea is to collect information. Going directly to a lawsuit is generally not a good idea.
Seems to me the best course of action is for the country, or an agency of Rwanda to file a Proof Of Claim on behalf of certain of its citizens.
There’s no need to explore a lawsuit. Let the US Trustee or Receiver find and collect the funds. Just be sure to get in line for an eventual distribution, That is what I would be looking to do and right now I would be contacting any agency that might be willing to act as aggregator of claims.
There’s no need to reinvent the wheel.
More information to Rwandans and others …
I’m reposting links found in other threads, to get some variations in the types of sources. This one is a TV news story about the bankruptcy.
http://www.necn.com/04/17/14/Hunt-is-on-for-TelexFREE-cash/landing_business.html?blockID=865250&feedID=11106
Some people prefer TV, some people prefer newspapers, some people prefer blogs, some people prefer court documents. I’m trying to cover many types of sources.
More information to Rwandans and others.
A radio interview with Paul Levenson, a director of SEC, explaining something about the court process. Partly in English, partly in Portuguese. The link has been posted in another thread.
youtube.com/watch?v=qWMYneKzh80
The legal action is in the beginning, and they’re currently focusing on assets freeze rather than on claims from victims.
He gives a clear explanation for WHY TelexFree has been prosecuted. It was because the payouts came from new investors rather than from legitimate business activity.
More information to Rwandans and others …
Here’s something locally from Uganda.
redpepper.co.ug/dont-say-we-didnt-warn-you-telexfree-files-for-bankruptcy-billions-lost/
It’s partly about how local financial analysts see the bankruptcy filing and how it will affect the investors. They describe it as a “financial nightmare”, but they haven’t looked at the intervention from SEC.
Normally, SOME money will be recovered, but it will take a very long time.