SEC want Sann Rodrigues back in jail for contempt

Last year when the SEC moved to shut down TelexFree, Sanderley Rodrigues was hit with a temporary restraining order. This was later converted into a preliminary injunction, which saw Rodrigues barred from committing acts of fraud.

What Rodrigues thought a ban on acts of fraud meant is unclear, but soon enough Rodrigues was back to scamming people through iFreeX.

Seeking to hold Rodrigues accountable for repeatedly violating the terms of his preliminary injunction, the SEC have now asked that he be found in contempt.

As per a 12th of August “Motion To Hold Defendant Sanderley Rodrigues In Contempt”, the SEC accuse Rodrigues (right) of “repeated violations of the Court’s orders”.

Covering the Rodrigues’ various violations, the SEC’s motion lays out his post-preliminary injunction conduct.

As part of the TelexFree civil case, Rodrigues was ordered to supply the SEC with with detailed accounting records in May 2014.

Over a year later and he’s evidently still playing games with the agency:

On July 30, 2015 – more than one month after the Court’s latest deadline – Rodrigues finally submitted an accounting.

Although he signed the accounting under the pains and penalty of perjury, it is materially incomplete and misleading in many respects.

And just how stupid does Rodrigues think the SEC are?

Well for starters he blatantly attempted to lie about his TelexFree commissions:

In his accounting, Rodrigues repeatedly claimed that he received only $49,000 and that TelexFree had not paid him the other
commissions to which he was entitled.

Those statements are false.

Rodrigues received more than $1.3 million in connection with TelexFree, including more than $282,000 from TelexFree accounts and more than $669,000 from sources that explicitly linked the payments to TelexFree.

The latter figure includes $239,000 that was deposited into an account he did not identify in the name of a shell company he did not identify (SCZV).

Before it was shutdown, Rodrigues told investors he had made over $3 million dollars in TelexFree.

despite an asset freeze in the terms of the preliminary injunction he’s currently subject to,

Rodrigues conducted financial and other transactions through a multitude of shell companies: Atlantic Star USA Inc. (“Atlantic Star”), Atlas Global TrustLLC (“Atlas Global”), Ayin Investments, LLC (“Ayin Investments”), JMJM Logistics LLC
(“JMJM”), SCZV LLC (“SCZV”), SMA Logistics, LLC (“SMA Logistics”), VICSS, Inc. (“VICSS”), World Global Business Inc. (“World Global”), WWW Global Business Inc. (“WWW Global”), and ZVX Investment Corp. (“ZVX Investment”).

Bear in mind none of these companies are legitimate, with Rodrigues creating them only to continue his defrauding of the general public at large.

The detailed accounting records Rodrigues didn’t want to give the SEC? Here’s why:

(Rodrigues) and his wife had a brokerage account at Wells Fargo Advisors (“Wells Fargo”), and he maintained a total of six accounts at JPMorgan Chase (“JPMorgan”) and BMO Harris Bank (“BMO Harris”) for four of his shell companies: JMJM Logistics, SMA Logistics, WWW Global, and ZVX Investment.

As of April 19, 2014, the total amount in the accounts was more than $1.5 million.

As of April 19, 2014, the Commission staff had not sent the TRO and Asset Freeze to BMO Harris, because the staff had not yet seen evidence that Rodrigues maintained accounts there.

If he had submitted the accounting when originally required, the Commission would have learned about the BMO Harris accounts at that time.

Instead, it took more than one year before the Commission staff found evidence of the accounts and notified BMO Harris about the Asset Freeze.

The year Rodrigues gave the SEC the run around was of course calculated, with Rodrigues remaining operational through the unreported accounts.

During the intervening year, Rodrigues moved thousands of dollars in and out of the BMO Harris accounts.

Between April 21 and April 25, 2014, Rodrigues withdrew a total of $21,600 from the BMO Harris accounts for SMA Logistics and ZVX Investment.

The withdrawal of these funds violated the Asset Freeze.

On May 1, 2014, Rodrigues withdrew $211,473 to close the JPMorgan account for WWW Global. The withdrawal – which JPMorgan processed by mistake – was in the form of a cashier’s check payable to a third party.

The withdrawal of these funds violated the Asset Freeze.

Between May 2014 and February 2015, Rodrigues used an account at PayPal, an online payment service provider, to deposit more than $152,000 and withdraw more than $176,000.

The available documents do not identify the source of all funds that passed through the PayPal account.

To the extent that the funds were in the possession or control of Rodrigues on May 8, 2014 (when the Court entered the PI and Asset Freeze) or were derived from the sale of assets in his possession or control on that date, the withdrawals violated the Asset Freeze.

To the extent that Rodrigues withdrew more money from the PayPal account than he deposited, the draws on this de facto credit arrangement violated the Asset Freeze.

Between June 2014 and April 2015, Rodrigues opened five new accounts for himself and his shell companies at BMO Harris, Regions Bank, SunTrust Bank, and CenterState Bank of Florida. He used those accounts to deposit more than $502,000 and withdraw more than $295,000.

The available documents do not identify the source of all funds that passed through these accounts.

To the extent that the funds were in the possession or control of Rodrigues on May 8, 2014 or were derived from the sale of assets in his possession or control on that date, the withdrawals violated the Asset Freeze.

Apparently Rodrigues is of the mind that compliance with court-ordered asset freezes is optional.

With the funds he sought to hide from the SEC, Rodrigues wheeled and dealed in luxury automobiles.

On April 25, 2014, Rodrigues caused WWW Global to transfer a 2007 Lamborghini Gallardo sports car to an individual named Daniel Filho. (WWW Global had paid $100,000 for the car in September 2013.)

Daniel Filho is currently facing jail time for running of DFRF Enterprises, a multi-million dollar Ponzi scheme Rodrigues helped to promote.

According to the Notice of Sale, the transfer was a “gift” to Filho.

The “gift” of the Lamborghini – only six days after Rodrigues was served with the TRO and Asset Freeze – violated the Asset Freeze.

Of note is that in the accounting Rodrigues finally provided the SEC, under penalty of perjury he claimed Filho never paid him.

This despite Filho assisting Rodrigues to liquidate his automotive assets:

In his accounting, Rodrigues stated that, in March 2015, he transferred the title to four automobiles (2007 Lamborghini, 2005 Ferrari, 2007 Mercedes, and 2010 Mercedes) worth $260,000 to an individual named Daniel Filho, and that Filho never paid him.

Those statements are false.

On April 25, 2014, WWW Global transferred the 2007 Lamborghini to Filho as a “gift”.

On April 29, 2014, WWW Global sold the 2007 Mercedes to a car dealer for $22,000.

On May 8, 2014, WWW Global sold the 2005 Ferrari to a car dealer that paid $79,700 to the recipient whom Rodrigues had designated.

All three transactions took place less than one month after Rodrigues was notified that his assets were frozen.

Further, in March 2015, WWW Global received $150,000 from Filho.

Transfer the money to my shell company, nobody will work out I own it… heh heh heh.

On April 29, 2014, Rodrigues caused WWW Global to sell a 2007 Mercedes Benz CLS to a car dealer in Pompano Beach, Florida, for $22,000.

The sale of the Mercedes Benz – only ten days after Rodrigues was served with the TRO and Asset Freeze – violated the
Asset Freeze.

On May 8, 2014, Rodrigues caused WWW Global to sell a 2005 Ferrari F430 sports car to a car dealer in Orlando, Florida.

On May 23, the dealer paid $79,700 to the person designated in a power of attorney concerning the Ferrari that Rodrigues had executed on April 25, 2014.

The sale of the Ferrari – less than three weeks after Rodrigues was served with the TRO and Asset Freeze – violated the Asset Freeze.

Unknowingly or not, Rodrigues’ wife was an accomplice in some of his violations:

On June 6, 2014, Rodrigues and his wife purchased a 2013 BMW X6 automobile that cost $59,621.

Although the Bill of Sale listed his wife as the buyer, Rodrigues used a credit card in his name to make initial payments totaling $41,000.

The credit card charges violated the Asset Freeze.

Well honey I can’t buy a car, but if we put it in your name – no worries…

Perhaps his most prized asset, Rodrigues also sought to “protect” the family home.

On May 5, 2014, Rodrigues caused SCZV to transfer his family’s home in Davenport, Florida, for $100 to an entity called Five Star Investments & Properties, LLC (“Five Star”).

Five Star was organized on April 30, 2014 in Florida by a third party. At some point prior to April 8, 2015, however, one of Rodrigues’s shell companies (Atlantic Star) became the manager of Five Star.

Rodrigues had paid $425,000 for the house in March 2013 and had transferred the title to SCZV in September 2013.

The transfer – barely two weeks after Rodrigues was served with the TRO and Asset Freeze – violated the Asset Freeze

A $425,000 house slashed to just $100. Sounds legit.

Other properties Rodrigues owned were also shuffled around:

On May 6, 2014, Rodrigues caused SCZV and Ayin Investments to transfer one condominium and three single-family houses in West Palm Beach, Florida, to Five Star for $10 each.

The companies had paid a total of $268,400 for the properties between October 2013 and January 2014.

The transfers – less than three weeks after Rodrigues was served with the TRO and Asset Freeze – violated the Asset Freeze.

Again, $268,000 in housing going for $10… nothing but legitimacy Sann.

Clearly fed up with Rodrigues games, the SEC conclude:

Since April 16, 2014, Rodrigues has been subject to orders of the Court freezing all his assets.

He has flouted the freeze orders with reckless abandon. He has moved hundreds of thousands of dollars using accounts at banks that had not been notified about the asset freeze, plus an account with an online payment service provider.

He has bought and sold expensive automobiles. He has even transferred the title to his home and four other parcels of real estate.

Enough is enough. Rodrigues should be held in civil contempt.

Ordering Rodrigues to identify his accounts and return assets transferred in violation of the freeze would simply amount to ordering him to do what he has already been ordered to do on several occasions, or to correct what he should never have done at all.

Rodrigues’s flagrant and repeated violations of the Court’s orders warrant something more.

That “something more” the SEC suggest, should be the sending of Rodrigues back to the slammer.

As a means of encouraging compliance, some courts send the offending party to jail until he cures the civil contempt.

That sanction is fully warranted here. The Court should order that Rodrigues be returned to jail until he identifies all his current accounts and restores all assets transferred or disposed of in violation of the Asset Freeze.

In addition, the Court should warn Rodrigues that his answer will be stricken if he does not cure the contempt in the manner prescribed by the Court.

Rodrigues is currently under house arrest, having posted a $200,000 bond following his arrest for visa fraud.

How he ultimately responds to the SEC’s motion remains to be seen, but for now Rodrigues might have more pressing issues to deal with.

Citing a “breakdown in communication” in Withdrawal of Attorney filings, both Rodrigues’ attorneys ditched him on August 17th.

The undersigned counsel and (Rodrigues) have been unable to reasonably agree on the scope and course of representation.

Further, due to the preliminary injunction granted to the Securities and Exchange Commission freezing the defendant’s assets, the representation of Mr. Rodrigues has resulted in an unreasonable financial burden on this small law firm of two (2) attorneys, both of whom are representing Mr. Rodrigues in the instant matter.

Why Rodrigues engaged a “small” two-person firm to represent him in a billion dollar Ponzi fraud case is unclear, but they have evidently realized they are well in over their heads.

Separately Rodrigues was also indicted on visa fraud charges a few days ago.

What happens next?

Stay tuned…

 

Footnote: Our thanks to Don@ASDUpdates for providing a copy of the SEC’s “Motion for Contempt as to Defendant Sanderley Rodrigues de Vasconcelos”, filed on the 12th of August.

 

Update 21st August 2015 – Following his indictment for visa fraud, Rodrigues’ arraignment has been scheduled for September 15th, 2015.

At the present time he has no legal representation.

 

Update 9th September 2015 – Rodrigues has now filed for a second extension of time to reply to the SEC’s motion:

On August 21, 2015, Mr. Rodrigues’s counsel filed a motion to enlarge the time to respond to the SEC’s motion for contempt on the basis that Mr. Rodrigues’s counsel sought to withdraw and was in discussion with another law firm to take over representation of Mr. Rodrigues.

Since then, discussions with outside counsel fell through, and the undersigned counsel require a bit of additional time in which to respond to the SEC’s motion.

Rodrigues currently remains without representation and from the sounds of it, will now proceed to respond to the SEC’s motion himself (pro per).

Rodrigues has asked the court grant him until September 21st to file a response.

The SEC have consented to this second extension request, but in their response to Rodrigues’ motion stated:

As a matter of professional courtesy, the Commission will not oppose the second motion for an extension.

However, the Commission’s motion to hold Rodrigues in civil contempt is an important motion that warrants the Court’s consideration without further delay.

Accordingly, the Commission submits that, if the Court decides to grant a second extension, it should inform Rodrigues that there will be no further extensions.

Looks like Rodrigues’ response will be due by September 21st and then hopefully a hearing date will be set.

 

Update 11th of September 2015 – Judge Morton has granted Rodrigues’ request for an extension of time, on the condition that no further extensions will be granted.