TelexFree acknowledge SEC investigation
With TelexFree affiliates publishing all sorts of rubbish pertaining to the SEC investigation of the company, it was only a matter of time before the company itself would have to address the regulatory elephant in the room.
Unfortunately those hoping for information on the Wednesday subpoena summons are going to be left disappointed. TelexFree’s lawyers have made it clear the company is not interested in sharing what went down.
In an update recently published to the TelexFree backoffice, the company advises
TelexFREE Policy Regarding Regulatory Communication
As is the case with other leading direct selling companies, TelexFREE has a policy of cooperation with all state agencies.
The activity of direct selling companies is regulated by all states, and many states have MLM distribution registration statutes (including the TelexFREE home state of Massachusetts). As a result, direct selling companies such as TelexFREE are continuously filing documentation and responding to requests for information from state agencies (such as offices of consumer affairs, divisions of securities, or attorneys general).
Such agency informational inquiries are totally different from, and should not be confused with, a regulatory enforcement action.
TelexFREE has always responded to all agency requests for information. However, TelexFREE has never been the subject of any regulatory enforcement action in any state.
In April 2013, TelexFREE responded to requests for information from the Massachusetts Division of Securities. In January 2014, TelexFREE was again asked to provide information and to be available for interview.
In keeping with its policy, TelexFREE has been and will continue to be completely cooperative in furnishing information to all agencies.
TelexFree is a private company, and other than this statement, and as is the confidentiality position of most agencies, TelexFree does not publicly discuss its regulatory filings or interaction.
Very lawyery… and if I had to guess I’d say its from the desk of Gerry Nehra. Dealing with regulators on behalf of TelexFree would certainly explain his absence from the “conference” the company held in Spain last weekend.
Interesting to note is the not-so-subtle shift from Steve Labriola outright denying there was “any investigation” and promising affiliates that ‘if there’s something going on we’ll let you know‘, to “no comment”.
First they denied any investigation existed (despite the SEC requesting documents from them last year), and when that was confirmed it’s become “oh well at least we haven’t had any enforcement action taken against us… that’s something, right?”
In the carefully crafted statement, TelexFree don’t reveal anything new. Key to affiliates making an informed decision going forward with the company would be the disclosure of exactly what documents the SEC recently requested of them.
Oh and let’s not kid ourself, having the SEC call you up and demanding you send them documents and be on standby for an interrogation is certainly not the norm in the MLM industry.
Zeek Rewards tried to sell the same story to their affiliates when information leaked that the North Carolina Attorney General “requested documents” from the company in early August. By the end of the month they were gone.
Evidently attempting to pass off SEC investigations into a company as perfectly normal is becoming somewhat of a calling card for companies Nehra represents.
Meanwhile TelexFree affiliates are running around the internet proclaiming that TelexFree has been “approved” by the SEC:
NOTHING AGAINST CONSTA Telexfree!
SEC SAYS NOW IS TOTALLY COOL, A REQUEST FROM THE COMPANY WILL IMITIDO NOTING THAT A DOCUMENT SIGNED, SOON WILL BE PUBLISHED BY THE COMPANY.
The newest and probably the best information dealing with Telexfree today is from the SEC for the USA. Here is the information for you Telexfree Following fokes!
SEC Approval from USA today is Telexfree!
A Google search at the time of publication reveals that the above information has been circulated on no less than sixteen locations on the internet, particularly amongst Portuguese-speaking communities.
As always we’ll continue to keep an eye out for any new developments. Personally I just can’t see how the SEC would not take any action against the running of such a blatant Ponzi scheme for two years.
The new compensation plan meanwhile seems largely unattractive to the investment players, so it’ll be interesting to see how that plays out. I also wonder how TelexFree sold the SEC on the promised keeping of existing ROI payouts to affiliates on all investments made before March 9th?
Maybe it didn’t come up…
SEC Approval from USA today is Telexfree!
Banging my head against the wall…….
I just can’t beleive there are this many idiots on the planet
“motivated reasoning”. They aren’t idiots, they just have a huge hole in their brain when it comes to TelexFree. Cognitive bias.
Let’s point out that Massachussetts Department of Securities is NOT the SEC, shall we? In case it’s not blatantly obvious?
And to request documents again in less than 12 months?
Somebody’s playing word weasel here.
I smell a repeat of “Brian Underwood was never subject of SEC ruling” here. (Turns out, Mr. LaCore was)
Text translated on that image is not is a bit messed up. But this is the correct translation Not a google translate.
Even today I have talked to friends of mine who just invested all they had at the last minute on the old style contract. Againts my advice.
They seem to thing the company will be aroung till the end of the year and will continue to be able to keep up payments.
I cannot see how even if it’s not closed down with the new contract terms how they will keep up enought recruitment to pay off old contracts?
Is it just me or the maths dont add up?
Half of the planet is of below average intelligence. Combine that with poverty, TV and Carlos Costa and this is what comes out.
Against all the odds, I opened another contract 🙂
For me this is a dirty gambling. So what?!?!
Go big or Go Home 😉
To understand the math. You need to learn how discreet math works, if you want to figure this thing out.
It is not about being an Idiot or dumb. It is all about how high can you go!!! No pain, no gain…..People may think it is a easy money, but it is not! You have to risk it all for the glory!!!
Penny stock or phony stocks anyone???? it is all a cat and mouse game….when you got…..game over…..
Brilliant,
Why play a crooked game where you don’t even know the odds?
Telexfree is a ponzi it will be shut down this month assured to be
After the last meeting, telexfree is starting to send 1099-misc to all his affiliates within the usa. By law the IRS gave to bank, security, brokers until January 31st of 2014 in this case to report income paid to investors, employees, …how telexfree will explain a month delay in send the 1099 forms to people that already filled.
I saw a 5 forms 1099-misc just yesterday and I am located in a very popular telexfree’s area. My guess is that they issued all of them after last week’s suphoema. Telexfree was suppose to report any payment more than 600 dollars to their marketing commissions or contractors by January 31st and as well to the IRS by February 18th. They are late in both. ..
Oz, you need to see this right NOW. I hope it is not too late 😉 LIVE conference Telexfree http://new.livestream.com/accounts/5971503/events/2821115
What am I watching? Some guy on stage talking about his car?
Lol, he mentioned “customers” and all the cheering died down.
I bet every one of them is sitting there hoping they just explain how they can continue on passively earning…
Chang, we play this game every day when it comes to stock. Penny stock and so on. 2008 stock market?? Anyone. The banks are the biggest crooks, so spare me, if I want to get some of the bread crumbs.
Self-Employment Income
It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income.
All income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040.
Based on this….. Telexfee must report any and all payment made to a promoter, not just amounts above $600.
That conclusion was rather vague?
“Any and all” can be interpreted in two different ways …
* TelexFree will need to send 1099-misc EVEN IF the amount is less than $600, or
* TelexFree will need to report the full amount, but ONLY IF the total amount is >= $600.
The last one is probably the correct one. “Any and all” will include circumstances where the total amount is less than $600.
Vague. “Telexfree must report any and all payments made to a promoter” is not “vague,” though I agree that it is incorrect. . Telexfree is claiming that promoters are non employees so the following appears to apply:
Box 7. Nonemployee Compensation
Enter nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee,
On the other hand the IRS requires the recipient of the Misc-1099 to declare all Telexfree received compensation when filing a 1040 even if it is less than $600.
The vagueness was about the “based on this …” part, about the arguments leading up to the conclusion.
A: “It is a common misconception …”
B: “All income earned …”
C: “Based on this….. Telexfree must report any and all …”
“Based on this …” points back to arguments A and B, but those two arguments don’t actually lead to conclusion C.
CORRECT
Telexfree must report the full amount paid out to independent promoters during the tax year, if the total amount is >= $600.
The independent promoters must report any and all payouts, even if they haven’t received a 1099-misc from TelexFree, even if the total amount is less than $600.
* The money they have paid IN to TelexFree can potentially be deducted from the taxable income.
Well, here you get into a murky area. Money paid into TF is either invested capital (non deductible) or a business expense (deductible) The idea that someone can put money in, do nothing economically substantive and collect a return suggests the money flowing IN to Telexfee is/was an investment of capital not a business expense.
On the other hand the company is distributing Misc-1099s on the basis of non-employee contract compensation rather than 1099-INT, 1099-Divs or 1099 Bs as would be expected if there were an investment involved.
Eventually the IRS and the SEC have to come to grips with this because the two views are mutually exclusive. A thing can not be both a capital investment and a business expense.
Recognized stocks have disclosure rules to get listed at certain exchanges. Risks are not comparable. You can’t equate stocks to “all stocks” all the way down to OTC/pink sheets when most people understand stocks to be “wall street” (i.e. NYSE / NASDAQ)
For most people, legally earned money will have a higher “value” than illegally earned money. They actually prefer to pay taxes rather than having to hide the money from tax authorities.
For some people, illegally earned money will have a higher “value” than legally earned money. They prefer not to pay taxes, and will prefer to hide the money from tax authorities or clawbacks.
Legally earned money can normally legally be reinvested. It’s much more difficult and risky to reinvest illegally earned money, e.g. you can risk tax auditing and penalty taxes or even jail.
“Legally earned” means the money is legally yours. “Illegally earned” means the money legally belongs to someone else, even if it’s currently in your possession.
That makes Ponzi scheme winnings less attractive to most people, they want to legally own the money they have earned. They want to be able to fully defend their income. They don’t like if there’s any doubts about whether or not the money is legally their own.
From a tax viewpoint, it’s not an investment. And the money paid out is taxable as income rather than as profits from investments.
Dan Matthews clarified how an accountant will interpret it based on IRS’ rules.
If the payouts are taxable as income, then the money paid in should be deductible as expenses. The murky part will be about which doctrine to use, the cash doctrine or the accrual.
CASH:
Expenses will be fully deductible for the tax year the amount was paid. 1 Family AdCentral will be fully deductible with $1,375 if the amount was paid in real money, rather than as reinvestments of payouts to the back office.
ACCRUAL:
Only the part that actually can be related to the income received will be deductible. 1 Family Adcentral can be deducted on a per week basis, e.g. $27.50 per week (50 weeks).
Like I said the IRS and the SEC come at this from two different directions
First of all, the 1099-MISC forms TelexFree are issuing have wrong information. All of the ones, I personally checked have more amount that the correct amount paid…The fees and commissions performed for the non-employee’s services are more than actually what the non-employee or “promoter” or whatever actually earned or made. They miscalculate them since those amounts must be based only for 2013 and in all of them, TelexFree included for some reason amounts paid in 2014 which must be included on the 2014’s 1099-MISC FORM. They came with Las Vegas address. Also, they cannot issue 1099-B form at all. So, they will play they last card which are the 1099-MISC, but they are penalty.
Failure To Furnish Correct Payee Statements (IRS Section 6722) said that: If you fail to provide correct payee statements and you cannot show reasonable cause, you may be subject to a penalty. The penalty applies if you fail to provide the statement by January 31 (February 15 for Forms 1099-B, 1099-S, and 1099-MISC (boxes 8 and 14 only))
Also, TelexFree was suppose to file a 1096 FORM (Annual Summary and Transmittal of U.S. Information Returns)with all the 1099-MISC forms issued by February 28, 2014. Another late issue over here.
The change plan was inducted by the SEC and the 1099 forms are only the last choice to continue a few more months with the shame. The subpoena is working and you will see the real problems in a few months.
I see it pretty much the same way. The agencies are boxing them in. TFree sells positions, accepts investments, then distributes funds and issues a Misc 1099 ? Tax wise and accounting wise it does not add up. The lady who did this over at Zeek is going to jail for defrauding the government, so I have to believe that nobody at TF was eager to affix their name to anything doing with the IRS. The agencies are sweating them and somebody got thrown under the bus.
That is not an unusual situation when it comes to HYIP ponzi frauds.
The 1099s are sent out to keep the victims thinking they are dealing with a legitimate business.
When you think about it, if a fraudulent company has ripped off multiple thousands of people for multiple millions of dollars, the last thing they are going to worry about is their taxation responsibilities or whether the 1099 recipient is going to have to explain any inconsistencies between 1099 and his / her income declaration.
As a taxpayer, you should make the required corrections. The link in my previous post to the tax discussion with Dan Matthews should contain some useful info.
His arguments are the correct ones. My arguments were based on that Zeek Rewards “most likely would be shut down”. But my arguments were flawed, the amounts were taxable as income rather than as profit from investment.
DEDUCTIBLE
Amounts paid IN to TelexFree, real money rather than reinvestments from payouts to the back office.
Cash method or accrual method, normally the method you already are using as a tax payer (and that should normally be the cash method).
Payouts to the back office and reinvestments are parts of the inner workings of a Ponzi scheme rather than taxable events. Payments to/from e-Wallets are taxable events / deductible events.
VOIP subscription may be deductible, it’s a required expense to become a promoter and to earn income.
Expenses related to fake customer accounts may be deductible.
TAXABLE
Any money paid OUT from TelexFree to the taxpayer, including money paid out to e-Wallets.
NOTE
You will need to ask a professional about it. My post is only about my “personal viewpoints”, based on different tax discussions about Zeek Rewards.
It will be enough to follow the IRS rules. You can’t use the argument “But the SEC will most likely see it as a fraudulent investment”.
My own arguments in the tax discussion with Dan Matthews were flawed. I tried to identify it as a business man rather than as an accountant, e.g. I used logic like “more similar to profit from investment than to income”. Tax authorities will not use the same type of logic.
Friends…in “certain” parts of the USA?
We call this a cluster F***.
The scheme can’t acknowledge that it is issuing securities and promising a return so it pulls a fakey. Instead of reporting dividends or interest, it issues a MISC 1099 and claims the recipient was paid for work performed.
PPBlog just found a slew of new corps registered by Merill / Wanzeler
Telex International Inc.
TelexMobile LLC
Telex Mobile Holdings. Inc.
TelexElectric
http://patrickpretty.com/2014/03/09/did-telexfree-affiliates-fund-millions-of-dollars-in-loans-to-various-telexfree-connected-enterprises
I checked and they are all Nevada corps
If you ask me, I’d say they are dissipating their assets in advance of official sanctions.
Looks like a Gerry Nehra fix to me.
“Yo they can’t take your money if you spend it through a bunch of companies you set up”.
I still don’t see the new plan taking off. The hype the top investors have been pushing it bordering on crack-induced… yet when we’ve seen these passive deals try to go legit in the past they either flop or get shut down.
They can freeze all of it by emergency order… like they did the Zeek. Can even get it reversed, if need be.
There’s also Telex Financials in Florida.
As far as I can tell, one of those companies is run by Felipe and Leticia Reyes, who’s under JC (Juan Carlos) Rangel of Serenigy and Lucrazon. I can’t link them to TelexFree though. `
Yeah but this is Nehra we’re (probably) talking about.
This is the who guy thinks “just don’t call it an investment, she’ll be right” is legal compliance…
There’s only so much you can do with ****. 😉
Just a better translation to the headline of the article in the picture:
My bad, I had not noticed someone had already sent a correction to the translation. Should have read the comments before posting “/
Yeah and if anyone ever gets this document, feel free to send it my way and I’ll be the first to publish it.
Nobody has suggested that person’s should not follow the rules. Its a matter of which rules to follow. Aside from timely filing of the forms Telexfree is following the IRS rules…and a lot of good that’s doing anybody. On the other hand if Telexfree followed the SEC rules this discussion doesn’t happen.
Loan proceeds are not taxable to the borrower. The loan terms can be favorable…like 1/4% interest all due and payable in 20 years or some such. No qualifying and no paperwork for the favored person/entity.
By the time 20 years rolls around its all forgotten. The net effect is that funds are transferred without the recipient/borrower incurring a tax liability. Or it could be something else entirely.
Why are you guys spending all this time and energy on tax advice for TelexFREE and its affiliates?
They have MyFinancialAdvantage and Joe Craft for that.
Now, what are your opinions on our new app- the Telex App available in the Google Play store.
It let’s you call the whole world for free on your smart phone.
LOL, the lies TelexFree affiliates spread are absurd…
Treating this as unconfirmed, received via email:
As does Skype, Viber, Google Voice… So what? Oh, I know what: TelexApp’s been blessed by God itself, right? B**ch please…
Is not true.
Many banks are charging cross border transaction for all international transactions inside the payment, so is difficult to verify credit card in i-payout, the bank does not provide the cross border fee, they just tell customer that they can’t see because everything is in one transaction.
Also the i-payout transaction limit for telexfree reach it maximum sometimes after 15 minutes of reset. So it reject all transactions make by credit card.
My favorite is the one where an affiliate claims that Telexfree has an insurance policy that protects them from loss…. because a purchase made with a credit card insures the cardholder against “fraud loss.” oh yesh he really said it.
All credit cards transactions have chargebacks rights, how does a chargeback will work against i-payout I don’t know.
It will normally pop up some questions about it in April. I don’t believe TelexFree will be any different.
For Zeek Rewards, we had a lengthy discussion about whether or not “Cash available” in the back office really was taxable, e.g. when people reinvested the daily profit sharing and bought more sample bids.
Dan Matthews has partly answered that question. “Zeek Rewards is not a bank. A 1099 will have to be about actual payment of money, rather than about internal transactions”.
TelexFree will most likely have some similar issues. They will most likely pop up when people receive the 1099-misc tax forms.
Affiliates in Zeek Rewards had Howard Kaplan, a tax advisor hired by the company itself. He was recommended by Sandy Botkin, one of Dawn Wright-Olivares favorite tax advisors.
I don’t think ideas like that are very good.
Aerci Arreal started a new hunger-strike, this time in front of the Brazilian Congress:
http://economia.ig.com.br/telexfree/2014-03-10/divulgador-da-telexfree-faz-greve-de-fome-em-frente-ao-congresso.html
Oh please… Every brazilian knows that guy just wants another 15 minutes under the spolight. He is the only human able to go through a hunger strike with no hunger at all. Just check his Facebook page to watch all the “drama”.
He’s been hoping for some politician to just jump into the scenario and use that as propaganda, since this year in Brazil people will vote for new President, Governors, Senators, Congressmen and State Representatives.
New contract Telexfree: ( TelexFREE International, LLC)
http://www.telexfree.com/public/file/TelexFREEInternationalIndependentAssociateAgreement(EN).pdf
Browsing page Massachusetts William Francis Galvin Secretary of the Commonwealth by name Carlos Costa Woowww number of companies that are registered in the name and mostly construction. Really they are putting the money to produce
Sorry for my English, I’m Colombian
http://corp.sec.state.ma.us/corpweb/CorpSearch/CorpSearch.aspx
@Farao
Was it previously Massachusetts?
They’re creating corporations out of state and now claiming legal jurisdiction elsewhere too. It’s difficult to make any sense of this other than they know Massachusetts will eventually bring the gavel own on them.
@Brazilian
Surely there’s an easier way to get a 5 minute meeting with someone in govt who has time to listen to a “Ponzi schemes are great” rant.
LOL!!!!! You guys have been hating on telexfree for 2 years when people are making serious money. My friend who lives in my neighborhood makes $2,000 a week from telexfree for almost 6 months now (got his initial investment back).
You people are a bunch of haters. Keep hating while we make money. LOL
@mike
How much did he initially have to invest and/or suckers did he recruit to invest after him?
($20 a week on $299… to get $2000 a week? /facepalm)
You don’t legally “earn money” in a Ponzi scheme, they will make you BELIEVE you’re earning money. It’s simply an ILLUSION.
“Legally earned” means the money legally belongs to you. That’s different from “earned through a Ponzi scheme”. Your friend might not know the difference, but there’s clearly a difference.
5 months @ $2000 a week = 20 weeks = $40,000
I should bloody well hope he has got his initial investment back.
How much did he “invest” ??
This binds the affiliate and the company only, and has no effect beyond those two parties. Any State, any Federal agency, indeed anyone who has not signed the agreement can bring suit against Telexfree or any of its affiliates anywhere, without limitation.
Nope! It’s intermittently broken.
I’ve spent all afternoon trying to diagnose and fix it to no avail. Whatever is responsible for updating that feed along with caching is disconnected from the browser cache, as in the browser doesn’t recognize the updated comment feed as new content – it just loads the old one randomly on some pages.
@Oz
“Was it previously Massachusetts?”
Yes, that was the previous contract.
“Telexfree INC.
225 CEDAR HILL ST SUITE 200 MARLBOROUGH I state: MA I Zip: 01752 I Country: USA”
http://www.telexfree.com/public/file/Contrato_Telexfree-EN.pdf
Ok young men. Here is another bone for you to chew on.
My sponsor who was among the first to introduce it is making $60,000 a month. She has 1500+ customers that are outside of the distributorship. Granted, the distributorship is in the tens of thousands with the new app though, I see customers everywhere.
It will be used to millions of customers worldwide.
Go ahead boys, chew on.
@Paul
I’m calling major bullshit on that one. The VOIP service, from what I’ve read from TelexFree’s own affiliates is garbage.
1500 non-affiliate customers my arse. Have you seen the books or is this just your upline telling you so. If they are making anywhere near $60,000 a month, it’s from money invested and those “tens of thousands” of affiliates in their downline. That’s a lot of referral commission on their collective investment.
Oh and I’ll take your sponsor’s tears with ice, served with a side of “but I had no idea it was a Ponzi scheme!” if they’re ever subjected to clawbacks.
I agree with Mike that there are many people that are making some serious money with telexfree. My problem with telexfree is that i don’t think its a legit business but thats only my opnion and it does not matter.
However, if telexfree is confirmed to be a fraud. I will be very interested to see how its going to be charged. What will happen to their members that were net profitable and what will happen to the people that organized the scam.
To me having those questions above answered will determine if its worthwhile investing in similar scam or even organizing one.
@TimeWillTell
There’s nothing legit about taking $299 investments from affiliates and paying them out a $20 a week with newly invested money.
TelexFree’s business model determines whether it’s a fraud or not, time has nothing to do with it.
LOL, Aerci Arreal olm started another hunger strike. In the latest video, he said “Mr. Carlos Costa, you should be here with me. There is some space saved for you in this chain”.
Carlos Costa belongs behind bars, Mr. Olm.
How many customers do YOU have, outside the distributorship?
Don’t use Gerald Nehra’s definitions, where people in your downline and even yourself can be your own customer. You introduced the term “outside her distributorship”, so let’s stick to a definition like that.
A customer outside the distributorship will be a non-promoter spending his/her OWN money to pay for the VOIP subscription, preferrably for more than the first month.
How many real customers like that do you have?
“Go ahead boy, chew on”. (You introduced that one too).
Check Zeek Rewards and the clawbacks, then maybe you will change your opinion? I used “legally earned” rather than “making money”.
https://behindmlm.com/companies/zeek-rewards/clawbacks-filed-against-zeek-insiders-winners/
In a Ponzi scheme, people are MISLED to believe they’re legally earning a profit on their investments. Sometimes they will be able to keep their net winnings, and sometimes they won’t. But they don’t KNOW the result in the first couple of years.
People may feel attracted to the profit from Ponzi schemes, e.g. I have even seen people recommending it as a general investment solution. They will feel much less attracted if they know the profit is fake and can be clawed back.
Hey, in chains is not that bad… if he can’t get out of them.
The problem is your premises are contradictory, and the logic you got out of it is… nonsensical
1) What you mean is “some people *appear* to be making big money with TelexFree”
2) You then stated “TelexFree is not a legit busijness”.
The logical conclusion from that is “some people are breaking the law”
3) Then you stated “I don’t care what I say” (my opinion does not matter)
Therefore you’re basically saying “People breaking the law does not matter”
Which of course, is nonsense.
I agree with you that my premises were contradictory. But I dont think what I was saying was nonsense. I was looking at it as a risk/reward investment. (I know this is not an investment but in reality thats how people look at it)
What I was trying to say was if the penalties to getting involved or organizing a scam like this is a slap in your wrist. Worst that can happens to you is that they freeze the company assets and all you can loose is your initial capital. No one gets time behind bar or they don’t go after the people that were net profitable than it might not be a bad Risk/Reward.
“Therefore you’re basically saying “People breaking the law does not matter”
Which of course, is nonsense.””
I dont beleive this company is legit (My opnion) but they have also not been charged as illegal so therefore no one has broken the law
You have to register on the telexfree website in order to use or download the TF App. How silly is that! According to their terms by downloading the App you also will allow TF to have full access to your address book, facebook ID, etc…
http://app.telexfree.com/privacy_policy.pdf
Laws were likely broken. What you mean is nobody has been CONVICTED of breaking the law.
If I speed on the freeway (break the speed limit), but I was not issued a speeding ticket, I did break the law, but I was not punished. Not the same.
Funny, that’s what people were saying about Zeek Rewards not long before the SEC stepped in and shut it down.
Ponzi schemes are not “money games”. The risk/reward factors are quite different for most people.
* You can be fined if you write nicely about them and are in the wrong position.
* You can lose professional reputation and “market value”.
* You can lose social reputation, or get friendships destroyed.
* You can lose additional money when trying to handle the problem, because you’re unfamiliar with the type of problem.
* You may have to pay taxes for income you haven’t legally earned, net winnings that will be clawed back a few months later.
https://behindmlm.com/companies/zeek-rewards/sec-fines-troy-dooly-for-pimping-zeek-rewards/#comment-191929
You will most likely be considered to be a “low hanging fruit” = you will be invited to different reload scams for years to come.
@Time
If it walks like an investment and it quacks like an investment then, it’s obviously not an investment.
Sound logic.
They’re not. Look up Paul burks and his gang of net-winners sometime. Ask them about their wrists.
Guys, you are way too invested. You cannot tell whether they are guilty or not Oz with the limited information you have even if the part of the program that is ads central is improper. It will be looked at in context and with evaluation of intention and what is required to fix it.
Regulators and prosecutors look for crimknals not careless or stupid businessmen. You may be right; but you may also be wrong.
Diego, you should not talk about your mother that way even if she raised a rabid dog.
Yo, why the heck is this Ponzi going through all that trouble to collect what pretty much all the apps collect.
Also, as far as I know Whatsapp does not include international calling and Skype just does not have the Whatsapp features. The others you mention are not even in the game yet.
Yeah that crap’s not going to fly. TelexFree’s compensation plan wasn’t exactly a secret.
as a Ponzi scheme.
We’ve already seen this with AdSurfDaily and Zeek Rewards. Please don’t try to assert Gerry Nehra style compliance garbage here.
Careless and stupid my arse, this is calculated fraud. If the SEC ever file a case against them, look for the paragraph that says:
I can appreciate this being your first rodeo, but we’ve been down this path before.
Except there’s no way to tell them apart… Is there?
Ponzi and pyramid schemes can start as deliberate fraud, or it can simply evolve from need to cover up some losses by improperly comingle money. But the matter of fact is it’s criminal to do so. Whether it started off intended as fraud or not only affects the amount of sentence handed down, not the guiltiness itself.
This is a really informational website. Thanks everyone!
We have 50-60 articles about TelexFree, mostly about the situation in Brazil (e.g. the shutdown in June 2013).
https://behindmlm.com/category/companies/telexfree/
I am in the real estate business and I have done very well, however, it’s extremely hard just like anything else. I am somewhat involved in the stock market and have don fairly good there as well, but again it required a lot of work and risks. with this being said, there are a lot good ways on how to make money out there ( legal), but it takes hard work. This is why I don’t believe in such a scheme like TF.
I can’t wait until this nonsense is shutdown so people can realized that they have been cheated, I must admit; I am afraid about the aftermath.
Very funny video with Aerci interview’s highlights:
Im from Dominican Republic and Telexfree its being investigated and major banks like : Banco Popular and Banreservas, have all transactions from Telexfree blocked. Now investors from my country are openning accounts on banks in the US.
The only way to stop Telexfree is to shut it down from the roots. Really hope this is soon, some friends going to invest big money, and putting all hopes on this sh*t.
I am Dominican myself and reside in the US. I also have some friends that have left the real estate business to invest big money in TF.
They think I am a sucker because I have yet to invest, but I know it’s just a matter of time before they change my opinion about me. In the end when everything is over I will still be there for them.
I heard that Telexfree will be, or opened an actual office somewhere, is this true?
No way to tell, unless you check the office for extended periods.
Merrill was allegedly interviewed in the Massachussetts office, (by iG or Globo, I forgot) but it’s probably office of DiskAvontade, operated by Wanzeler. The Suite 200 office they list is the “general” number you get if you just rent a mailbox there and ask for “virtual office” package.
I’ve tracked them listing at least 3 different address for their alleged UK office
Recently they registered several companies related to TelexFree, and allegedly transfered money to them, in various addresses around Las Vegas, probably more virtual offices.
Given this pattern, any sort of “actual office” is probably a diversion, and should be assumed so unless proven otherwise (i.e. you actually see TelexFree employees going to work there every day for extended periods).
@ frontier
That is a great video thanks. Sums up how many more will feel in 2014 for sure.
If any one had the time to translate it all to english it would be great for some of the non Portuguese speaking readers here.
Basically the guy now admits is a ponzi and telexfree managenst and top earners dont support (show up at the demo) those who lost out to the closure of telexfree in Brasil.
The Bearded guy at the end is responsable for me not getting into telexfree. One youtube video from him last year made my mind up.
I know some one person that has taken a bank loan to invest in telexfree.
Zeek Rewards (link) shows ONE type of aftermath, e.g. the clawbacks from net winners. Zeek was shut down by SEC in August 2012.
We do MLM reviews and follow up stories, rather than “scam investigations” or “opportunities in general”. The comments will reflect a wide range of viewpoints from different types of users in many different countries.
Scams will require hard work too, e.g. hours upon hours each day looking for the “low hanging fruits” that easily can be separated from their own money. 🙂
The investments you will find here will typically be the ones you should avoid if you didn’t look for “investments” like that initially. They will be “programs” or “opportunities” rather than “investments”.
All ponzi business should be legalized like the marijuana. All the people win, the government, the banks, everybody. This is the same when casino and alcohol were prohibited, now these two generate millions in taxes.
In the TF case, it’s self-sustaining, remember that each year all promoters have to renew contract plus 20% of their earning.
Times are changing too fast now and people should change too.
Right, because paying out $1040 annually + recruitment commissions on an initial $299 investment with 20% mandatory reinvestment is totally sustainable.
/facepalm just isn’t strong enough sometimes…
No way Jose.
They don’t, which is the problem of the Ponzi.
In case of alcohol and marijuana, people are willing to pay for them, and the profit stems from the cost of manufacturing vs. the profit that can be realized selling them.
No such profit margin exists in Ponzi schemes.
I have a couple of friends in the Dominican Republic and Mexico who have registered with Telexfree for quite some time. Could clawbacks reach them or are they “home free” once the scam is stopped and after “recovering” their initial “investment”? Anybody know historical repercusions for people in these countries from other Ponzi schemes like TF?
You’re suggesting fraud should be legalized. Did someone drop you on your head?
@Jose
Please think what you are saying before you write it down. Your statements do not make any sense. It’s devastating to see some people in my community getting home equity loans to invest on TF.
Anyway, Let those people make those types of mistakes at the end, they will lose their houses and people like me will take advantage of this by buying those houses on foreclosure.
How about learning from mistakes made in the past, huh? Yeah, right, eeeeeeeeeverybody wins. I don’t think that’s what any albanian would say, after the Albanian Unrest of 1997, AKA the Albanian Pyramid Crisis of 1997.
Or even better, it can be implemented in the Fourth Amendment to the Constitution, as a Fundamental Right:
“All men have the right to bear arms and to participate in Ponzi schemes”.
TF, will go down the hill coz all the promoter are not happy about the new plan that they have.
And how this ponzi will stay alive if there is no money coming in from the new investment?
Macro economics don’t work that way. A Ponzi scheme can drain the whole community for wealth for several years.
Reduced wealth = reduced credit worthiness = reduced use of credit = reduced spending = reduced income = reduced prices for real estate. The people who normally could drive up the prices simply can’t afford to do it, and they don’t feel optimistic about the future either.
You can buy a house at a reduced price, but the prices will stay low for several years. Some markets simply won’t recover.
Increased wealth = increased credit worthiness = increased use of credit = increased spending = increased income = increased prices for real estate. People feel richer and more optimistic about the future.
My example models were retold from memory. I might have missed some details, but here’s the source (disabled link to Youtube “How The Economic Machinery Works, In 30 Minutes”):
youtube.com/watch?v=PHe0bXAIuk0
To be honest with you, I don’t think TF is going away for quite sometimes. If there was something illegal, the SEC would have shut them down by now don’t you think.
In the mean time I have friends of mine collecting $2000 a week. How can this be allowed? I don’t know, but it’s happening
* “Times” are largely what they always have been.
* People are largely what they always have been.
* Ponzi schemes are largely what they always have been.
The fact that YOU have joined something may feel like something “revolutionary” to yourself, but it will generally not have the same effect on the rest of the world.
The fact that YOU have “legalized” Ponzi schemes for your own personal use will mostly affect yourself. “Times” will continue to be what they always have been.
If bank won’t accept telexfree transfer in dominican republic how we can get paid???
@El Mago.
Fool you won’t. Te jodite loco por bruto.
hahaha YOU americans sounds SAD….you don’t always have to make sure your pennies don’t get lost, you are only dealing with pennies. I can’t believe that an investment of $289 has you guys pulling out you PHD’s from HAVARD with all of that calculated NONsence on why someone is deciding to payout $20 a week.
Lol BEHIND MLM cmon guys, BlowJOBs are $200 on craiglist, what are we really loosing??????
That being said, i invested close to $45,000. tell the GOV, SEC, BEHINDMLM to come and see what my bank account looks likes from the past 7 months hahahah.
yea okay, telex is fraud???? You sound like a racist with no color to begin with.
You’re going to make the case that people are only investing $289 into TelexFree each? Come on now.
$289… right.
Racist? Well alrighty then… knuckledragger-hour is officially open here at BehindMLM. Be sure to check out our specials on assinine, incomprehensible and “did he really just pull the racist card?” comments. Once they’re gone, they’re gone!
Sorry but all I hear are the rantings of someone worried about losing their $45,000 because of the new comp plan. You and I both know new investment is going to plummet. Where do you think your ROI is going to come from?
We don’t know anything about which types of transactions they have blocked.
Normal withdrawal methods from e-Wallets:
• Standard bank transfer (Multicurrency)
• Expedited bank transfer
• Mailed Checks
• Credit/Debit cards
• Prepaid cards
• Member to member
• Other payment networks (i.e. PayPal, Alipay, QIWI)
The information was found on i-Payouts own website. You probably have access to more information than I have.
@S Smith
How long it takes for regulators shuts the down questionable schemes varies on a case-by-case basis. You only have to look at the recently announced FTC Herbalife investigation to behold the mysterious wonders of US MLM regulation.
According to your logic, Herbalife cannot be a pyramid scheme because the FTC hasn’t shut them down for thirty-three years.
Regulatory action or a lack thereof is always going to be a poor indicator as to whether or not an MLM company is operating as a pyramid scheme (or Ponzi/pyramid hybrid in the case of TelexFree). Base your analysis on the business model and compensation plan.
Taking $289 investments from affiliates on the promise of a $20 a week guaranteed ROI from newly invested money is not kosher. MLM or otherwise.
To lose something, you must first HAVE something to lose. So the risk should be relatively low for you.
You can probably fill in some information about withdrawal methods, to the question in post #108?
All I have to say is that some people around my community were pissed off about the new plan.
Faith Sloan wrote this on her website:
heyy! I am from Paraguay, TF is pretty talked about over here too.. HOWEVER idk how people are coping with the new Compensation Plan..
What I heard from a friend is that himself as well as many of the top earners (the TF pioneers per say) are migrating their wealth to new ventures due to the fact that some people from our federal reserve are getting into the legallity of TF’s operations in Paraguay.
He said and I quote “they found out TF’s isnt abiding to Paraguay’s rules and therefore is of illegal extend in the country”.
Plus… how do telexfree “employees/promoters/consumers” pay taxes on countries other than the US??
– The bigger the ballon gets the bigger the burst will be when it bursts.
Losers = new players, other local investment businesses, sustainable jobs, local economy/businesses in the long term. TF suicides ?
– Now overall the Island of Madeira is maybe $50m down, in 6 months time it might be $100m down. We know the individual customers don’t think they have lost any money, cos they all have their eyes on the 3 month limit when they start getting some money back, and maybe 6 months when they get into profit, So they are not sad now, but will there be TF suicides when it does burst?
– You can only take money out that others have put in. They are waiting for their 3 months to & their profits to come if it suddenly stops they won’t get their money back.
– However that’s not the end, they are not the only losers, aren’t the legitimate businesses losing out ? Cos money that would normally be going into them has been going into TF. That should mean sustainable local jobs are not been created.
– Now we know now that there are jolly jobs now as people spend there TF “profits” , but that will be followed by a recession, when the scheme ends and many more people will have lost money that they would otherwise spent in the future, so bad for Madeira economy and businesses.. Then they will ask for EU help .. and the EU will tell then to …
PS People should know cos It flippin happened before : the Dona Branca scheme ran from 1970-84 until it collapsed losing €85m of clients money ..and it was a 1993 TV novela.
I am just amazed how people invest their money blindly. This TF scheme is crazy and when all is set and done, there will be nothing but regrets.
@YO,
I personally know Santiago Dela Rosa. This guy is a low life and uneducated idiot.
I think the million dollars question on TF is. what happens to the people that are net profitable?
I know that some of zeek reward members have some POSSIBLE clawbacks. But is the Gov really going to go after these people. Will these people be able to settle and still keep SOME of the money they earned illegaly?
The only knowledge I have with the SEC and a Pyramid Scheme is with San Rodrigues, FoneClub case. And it seems that he was able to settle with the SEC and keep some of the money to continue on with pyramid scams
FoneClub Case:
http://www.sec.gov/litigation/litreleases/2007/lr20127.htm
To my conclusion, (This is my opinion only):
The people running a pyramid scheme has to be net profitable at the end (given they earned the money illegaly) In my point of view they have to be net profitable after settling with gov, paying fees, paying lawyers etc. Otherwise why would they keep doing the same thing over and over again?
The clawback cases against a) insiders, and b) 9,000 net winners are ongoing.
175 net winners have settled the claims long time ago, most of them before May 31 2013. Average settlement has been 56.7% of the net winnings. Highest settled amount was $450,00 for net winnings of $540,000. 2 very good settlements were 2 amounts around $175,000 settled at 50%.
It’s possible to get a good deal if people have something significant to OFFER = if they can pay back 50% or more (“money in hand” is best), and the amount is within the right range.
Does these settlements on net winnings left room for income tax paid or to be paid and lawyers expenses?
Tax is up to the perp, and AFAIK (not expert in tax law) forgiven debt is considered income and thus will be taxed. 😉
Does it take in account the income tax paid (if any) or it ia like this to leave room for any due income tax? How about lawyers expenses?
You need to talk to a tax attorney. This is WAY outside of expertise of most people.
A settlement is a compromise. Whatever you agree to presupposes that you have taken all known information into consideration before paying back a stipulated amount.
Tax wise. Money paid back to a Receiver/Trustee in a clawback action can be used to offset income. If the income was declared in a previous year you must amend you return to take advantage of this. Attorney fees would be decuctible as a miscellaneous investment expense in the year paid.
The clawbacks are about recovery of the victims’ money, as much as reasonably possible. The settlements are about negotiations with the individual net winner about the amount.
Settlements will reduce both costs and risks for both parties, i.e. an 80% settlement will be a very good deal for the Receivership, 67% can be “acceptable”.
If too few are willing to settle the claims in the range 67-80% then he will need to reduce the lower limit, e.g. to 60% and then to 50%. New range will be 50-80%, but he will try to get the highest possible amount. Average settlements have been 56.7%.
If money has been used to support livelihood BEFORE the shutdown, then the court can potentially accept it as “acted in good faith” and reduce the claim. If money has been invested or used to buy luxury items (house, cars, jewelry, etc., or paying down debts), then the net winners can’t expect to keep that.
Money spent on paying income tax can POTENTIALLY be negotiated, “taxes are something out of the net winners’ control”. Money spent on lawyers will be the net winners’ own expenses. They were expected to PRESERVE money from the moment they knew Zeek Rewards was shut down, rather than spending it on unnecessary expenses.
Negotiations are only possible if you have something to OFFER, something of VALUE. The TRUTH can have some value, e.g. “I can’t pay, but I can give you correct information about WHY I can’t pay”. Half truths have only negative value.
A few of the settlements were so called “walkaway settlements” = “case closed, no further claims”. Some people simply can’t pay, and can’t be expected to pay either. They typically also had relatively low net winnings, e.g. $1,000 – $2,000.
“Money in hand” have higher value than “pay it down over 12 months”. “Pay it down over 12 months” are both risky and costly.
It’s generally easier to get a good settlements within a specific range, not too low and not too high. It can be easier to get a good settlement if you owe $40,000 than if you owe $4,000 or $400,000.
I should have limited that statement about truth and value. 🙂
The truth can have some value if it doesn’t harm you, if you can offer the truth (or something close to the truth) without harming your own interests.
The truth can have some value for the OTHER PARTY, make it easier to suggest an amount for the settlement, make it easier to make decisions. SOME people shouldn’t even TRY to negotiate a settlement, but most people can.
Settlements are a part of the game. People will need to learn how to play that part of the game too. It doesn’t make any sense participating in risky income opportunities if you don’t master the WHOLE game.
175 out of 9,000 people have made relatively good settlements (most of them, but not all). That’s 2% of the net winners. I’m not very impressed by that statistic.
I think taxes are the least of these people problems. At the end of the day they know the money is being made illegally, then why pay taxes and decrease your profits?
What remains to be seem is whether or not TF promoters will be held ACCOUNTABLE and/or be NET PROFITABLE at the end after settlement fees, penalties, lawyers, etc.
Botton line
#1 Is Jose the “promoter” held accountable for joining a pyramid scheme or was he just a victim (Any Charges)
#2 Will Jose be able to keep SOME of his illegally earned profits ($$$)
To be or not to be?