TelexFree communications registrations in jeopardy?
In a last-ditch attempt to appease regulator and reduce the impact of the fraudulent activities the company had engaged in over the last two years, TelexFree began filing applications to register itself as a telecommunications provider in US states.
The question of why this was only done now of course lingers, but that’s not the focus of recent developments regarding TelexFree’s applications.
Contracted as a consultant to assist TelexFree to file these applications was Joseph Isaacs, who is ironically widely credited as a catalyst in the demise of the Fortune High-Tech Marketing pyramid scheme.
Isaacs, working through his company ISG Telecom, filed the telecommunication registrations on behalf of TelexFree. As cited on the Washington registration form, the reason TelexFree needed to register with the state is because
All telecommunications companies must register with the Utilities and Transport Commission (UTC) prior to beginning operations in the state of Washington.
To that effect, on the 21st of March an application was filed, requesting permission for TelexFree to provide “long distance interLATA” services in the state of Washington. On the application, Carlos Costa, James Merril and Carlos Wanzeler were cited as officers/directors of TelexFree. Isaacs was listed as a “regulatory contact”.
In a letter addressed to Jim Merrill dated April 16th, Steven King, Executive Director and Secretary of UTC, advised
Effective April 20, 2014, the Utilities and Transportation Commission grants TELEXFREE, LLC registration in Docket UT-140457 as a competitive telecommunications company.
Upon learning about the cases, particularly that of the SEC, Isaacs appears to have hit the panic button. He now wants nothing to do with TelexFree’s telecommunications applications – in Washington or anywhere else.
In a April 18th email addressed to “Commissions Secretaries (at) ALL United States Public (Utility) Service Commissions”, Isaacs writes
It has come to my attention this week that my client, TelexFree LLC, whom has applied for or has recently been approved to provide telecommunications services in your state, has misrepresented their intentions, their business model, their customer base and the source of all their revenue, income and profits declared on their 2013 financial statements that were provided to this commission for the approval of their petitions (applications).
In my twenty years as a consultant to telecommunication carriers and applicants, I have never experienced a client who provided such false and misleading information. Apparently the affidavits signed by the ex-managing member, Jim Merrill, were not truthful either.
Both ISG-Telecom Staff and the Commissions have been duped by their misleading information.
All future regarding TelexFree LLC should be directed directly to Jim Merrill, ex-managing member and 50% owner of the company. Please disassociate my firm with these alleged crooks.
What exactly Isaacs declaration and withdrawal from co-signing TelexFree’s applications means I’m not entirely sure of at this point. I imagine there’s a review process at the UTC, subject to which TelexFree’s applications would likely be withdrawn, or at the very least (temporarily) suspended.
Isaacs has included a copy of the SEC and Securities Division complaints as an attachment with his email, so if the UTC weren’t previously aware of the cases – they no doubt are now.
What’s potentially interesting is that TelexFree’s bankruptcy petition centers around the projection of revenue generation via the sale of new telecommunications products and services. Naturally without a telecommunications registration, these plans would be dead in the water.
Whether or not the Securities Division and/or SEC have gotten in contact with Isaacs after they’d filed their complaints is also unclear. Obviously prior to Isaacs email dated April 18th he hadn’t been contacted, as he clearly appears to have had no idea of the SEC and Securities Divisions’ respective cases against TelexFree.
One thought is that Isaacs might have known (both investigations were made public prior to the filing of complaints), but decided to let the dice roll and see what happened. Then after the complaints were filed, he realized it was game over.
I’m no telecommunications expert, but I will offer a little pro-tip for the future: If the company you’re being hired by is under SEC and/or Securities Division investigation, it’s probably best to hold off until the result of that explanation is either made public by the agency, or provided to you by the company itself.
How much Isaacs and ISG Telecom were paid by TelexFree doesn’t seem to be recorded anywhere on the filings, however I imagine at some point most, if not all of it, is going to have to be returned. That is of course pending the granting of a permanent injunction against TelexFree this Tuesday, which seems pretty certain at this point.
Footnote: My thanks to BehindMLM reader “Faraó Mmn“, who alerted us to Isaacs’ email and the Washington filing.