TelexFree Brazil ruled a Ponzi scheme, fined $782,512
There hasn’t been much news out of Brazil this year regarding the TelexFree Ponzi case.
Earlier this year the court-ordered expertise from independent auditor Ernst & Young was filed, citing evidence that revealed TelexFree was a Ponzi scheme.
And on Wednesday the 16th of September that ruling was finally made, with Judge Borges concluding TelexFree is indeed a Ponzi scheme.
The first action taken against TelexFree in light of the ruling was the issuing of a $782,521 USD fine.
The fine is reflective of compensatory damages, and is in addition to TelexFree now having to pay back its Brazilian victims.
All TelexFree contacts between affiliate investors and the company in Brazil have been declared null and void, following Judge Borges finding that TelexFree is ‘a financial pyramid, not a multi-level marketing network.‘
As a consequence of the nullity of contracts, (TelexFree) was ordered to return to partners and publishers the amounts received by them by way of acquisition AdCentral and AdCentral Family positions.
How much TelexFree Brazil are going to be up for has as of yet not been disclosed, but I suspect we’re easily talking at least tens of millions of dollars here.
If any TelexFree contracts are found to have been created involving Brazilians, the company also faces potential $26,000 fines per account created.
Following the suspension of TelexFree’s business in Brazil, a number of top Brazilian affiliates continued to market the scheme through the US and Peru.
As of yet no word on potential clawbacks, but individual Brazilian affiliate net-winners will have their earnings deducted from any amounts claimed.
TelexFree’s Brazilian arm Ympactus has also been dissolved by the court.
The Acre Public Prosecutors case against TelexFree was first filed back in June 2013, with Judge Borges decision bringing a close to proceedings. Whether or not criminal charges are now filed against TelexFree insiders remains to be seen.
James Merrill is current under home detention in the US, but Carlos Costa and Carlos Wanzeler are believed to be living in Brazil (Wanzeler fled the US as a fugitive last year pending his arrest).
Brazilian publication Globo sought comment from TelexFree’s lawyers regarding the decision, but were only told:
Telexfree has not yet been formally notified (of the decision) and would only form a position after formally learning of the decision.
One can probably expect a few more sweaty videos from Carlos Costa… after which TelexFree will still be a Ponzi scheme.