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.
Just one day earlier both the Massachusetts Securities Division and SEC had filed respective Ponzi and pyramid scheme complaints against TelexFree.
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.
The same happened in Brazil last year, the scheme was running since mid 2012 and got a really boom in September~November. In March/13, after the whole media and justice was in their toes, it was the time TF made the correct registrations on ANATEL (telecommunications regulators) about their main product. Not they’re anybody using it.
Ps. I won’t gonna enter in the technical details, it’s kinda long and boring stuff, but if anyone want to knwow i can translate later the ANATEL complaint.
Meanwhile in lala-land they’ve collected over 3000 signatures begging for telexfraud to get bailed out.
It’s scary what mass denial can get people to do. Their facebook page is full of “no negativity” comments.
Mass denial is worse than regular denial because they can form a community that reinforce each other’s (mistaken) beliefs instead of working to fix them, and scammers know how to form those communities, or insinuate themselves into leadership roles, and often, lead them onto reload scams or harvest info for other purposes.
Seen it again and again. It’ll take a while for people to get through their denial phase. 5 stages of grief and all that.
@Oz, two minor typos.
1) You wrote “Joeseph Isaacs”. It’s “Joseph” or “Joe”.
2) It’s “interLATA” where LATA is capitalized. LATA is abbreviation for “Local Access and Transport Area”, i.e. area you don’t have to enter an area code to reach, i.e. “home” area. InterLATA is long distance, so you don’t really say “long distance interLATA”
Are all aware of the latest? ‘TelexFree Asks Bankruptcy Court To Eliminate Promoter Obligations’; what’s worse is there is this mass deniel that is being spoken of above. Who will these people blame? What a shame on these crooks…
On the date it filed bankruptcy in a Nevada federal court, and just days before Massachusetts regulators and the Securities and Exchange Commission accused the company of being a massive pyramid and Ponzi scheme that had raised at least hundreds of millions of dollars from investors worldwide, TelexFree LLC filed a rather innocuous-sounding motion to “Authorize the Debtors to Reject Certain Executory Contracts Nunc Pro Tunc As Of The Petition Date.”
Cloaked in bankruptcy parlance, the title of the motion holds little meaning to the estimated hundreds of thousands of “promoters” that, until recently, were promised lucrative returns for placing daily advertisements and recruiting new investors.
However, a casual read of the Motion makes clear that the company accused by regulators of being an “egregious” pyramid scheme seeks now to use the Bankruptcy Court’s power to eliminate the obligation to pay accrued compensation likely totaling hundreds of millions of dollars to “promoters” – under the theory that elimination of these obligations will allow the company to “ultimately prove successful and profitable.”
Ironically, one of the chief concerns cited by TelexFree related to questions “raised as to whether the Original Comp Plan is compliant with law, which jeopardized the Debtors’ business.”
If you read any of the petitions filed by ISG-Telecom on behalf of TelexFREE, LLC – they were NOT co-signed by Isaacs. They were signed and notarized by Mr. Jim Merrill, the then managing member of TelexFREE. The only thing Isaacs ever signed was the cover letter attached to Mr. Merrill’s application to various PUC’s requesting the applications be filed with the information attached and provided by Merrill, Wanzeler & Craft. You should get your facts straight before shooting the messenger.
Joeseph Isaacs: I’m shocked, shocked to find that a Ponzi is going on in here!
Do you think Greenburg Truarig will write a similar letter to the Bakruptcy Judge?
@No common sense
And I quote;
Isaacs quite obviously prepared everything. Merrill is pretty clueless about VOIP and telecommunications, that much was evident in the SEC complaint.
Right, Isaacs was just a “messenger”. Good one chief.
@Kasey thanks for the pickups.
Meanwhile, in Dominican Republic https://pbs.twimg.com/media/BlV_Xd9CcAENBJ_.jpg:large
Diario Libre: Over 150k dominicans affected by Telexfree
El Día: Telexfree’s bankruptcy shakes La Romana (A large city)
Listin Diario: The “pyramid” Telexfree under investigation for scam.
A few images of Mr. Carlos Costa before his “fame” http://imgur.com/a/qhoXp#0
the other man in the photo is Pelé Reis, the “former street seller who bought a Ferrari after joining Telexfree”:
I doubt Joseph will have to give back the money he was paid to put together the application. His company has done this work for dozens, if not hundreds, of companies over the years. Just like the power company won’t have to give back the money they were paid for the electrical power TelexFREE used.
The people who WILL suffer clawback issues are the ones who profited from the TelexFREE business model, whether or not they were aware it was a scam, just as happened with Bernie Madoff.
lol in the bingo i don’t see “Now all is in God’s hands we have to have faith”
My primary concern is regarding my eWallet account. I invested about $9,000 (US) into Telexfree. My payout up until the bankruptcy was approximately $16,600. So I was making considerable profit. So much, in fact, that I quit my job as a hotel manager. Now I have another $3,000 lost in EWallet.
Since EWallet is a separate company, I am failing to see why I cannot access my funds there. Does anybody know what I can do, or is all hope lost? Yes, I am aware I took a huge risk by quitting my job. Yes, I was never under the impression that Telexfree would last forever, as MLM’s never do. I was just hoping it would last long enough to get me out of this town and pay off some medical bills. Now I’m jobless AND losing my home.
I do not blame anybody but me since I knew the risk I was taking, and would appreciate NOT having this thrown in my face. I am suffering the consequences for taking said risk. I just would like someone to offer some advice on accessing EWallet.
KCC released an updated list of Telexfree creditors:
(which includes the SEC(s))
Any idea if Steve Labriola is still showing up for his evening conference call as he had vehemently promised. If I remember correctly, the first and second days that he was briefly on the call he didn’t really say much and did not answer any affiliate questions. But, he did say that he promises that he would come on daily for a conference call even if he didn’t have anything new to say.
So far the liar has already missed one day that I know of and I have a feeling that he stopped showing up all together. How could someone maintain the delusion that TelexFree is somehow legit in the face of such boldface lies?
Carlos Wanzeler believes so much in Telexfree that he was the first one to skip town/country on Sunday before they filed for chapter 11… Wake up telxfreers, you’re on your own…
The leadership team has crumbled and they are all looking after their own interests right now… Look around to see if you’ll find or hear from either Carlos… Unless of course you start looking at some very far away places around the globe.
Exhibits A and B are service lists of persons/entities who by statute must be notified of the contents of docket 42 and 45. For example, Eric Holder the US Attorney General is on the list but he is not a creditor, and neither of course is the SEC.
Wanna laugh like. Crazy? Live now.
Att: There have been interesting developments in the bankruptcy case, at first sight it seems there are strong objections to the employment of KCC by Telexfree. Apparently it was KCC as well who issued the Telexfree Press Releases, without permission from the court. See:
kccllc.net/telexfree , Docs 59 and 60
It must be that secret illegal global ponzi scheme ring which secretly infiltrated Zeek Rewards and changed their business workings.
Looking at those two documents, it seems the two processes (SEC and bankruptcy) have already meet (today?), and the Nevada Court is acting now in full awareness of the SEC processes going on in Massachusetts.
It also lists the requests not passed in the Apr 17 hearing, and which were delayed to May 2 (almost all they requested?).
“The United States Trustee requests that the Court take judicial notice of a case currently pending in the District of Massachusetts entitled Securities and Exchange Commission v. Telexfree, Inc. et al, Case No. 1:14-cv-11858-DJC (D. Mass. filed Apr. 15, 2014) (the “S.E.C. Action”).”
Wow, KCC got a 350000 retainer just to help TelexFree declare bankruptcy? WTF?!
kccllc.net/telexfree/document/1412524140421000000000006 (i.e. document 59) look at paragraph 10. And they want to keep it and keep taking money from it for whatever reason deemed reasonable. US Trustee is going to fight their appointment just on that.
And the judge do NOT like the idea that KCC “jumped the gun” by issuing press release of bankruptcy and their appointment before the judge even gave them his permission! (Document 60)
Add that to the notice filed by Mass and SEC, this bankruptcy is dead. IMHO, of course.
They’re definitely hiding in underground bunkers, err… rat holes. It’s time to smoke’em out.
KCC apparently issued the declaration of bankruptcy, the one that started the panic, and their engagement by TelexFree as bankruptcy admin. Judge is not liking the idea that they did that even before he signed off on that “first day motions” (i.e. who gets to do what).
This is going to affect the fees charged by KCC against their 350K retainer, but actually has little effect against the bankruptcy itself, IMHO.
I’m pretty sure the other press releases, such as the one blaming HSI/SEC was written by Labriola or Merill, my bet’s on Labriola.
Thanks! That explains all the initial confusion I had about the involvement of KCC in the process BEFORE their approval by the judge (which came day 17, it seems). This damn thing is quite confuse to follow…
I just woke up. Going through the bankruptcy stuff now and will have an article up shortly.
Despite defending TelexFree’s business model, iPayout have effectively frozen payouts on TelexFree accounts. Whether they’ve been served or not I can’t say (haven’t seen anything yet) but I think it counts as continuing the business if affiliates can withdraw.
A temporary restraining order is currently in effect, which will likely turn into a permanent injunction tomorrow.
You’re not getting that money.
I believe the latest call was last night, in which Labriola simply announced that the VOIP service had been switched back on. That was it.
Steves call? Darn it….I missed it?
Well, it was between Steve and the documentary on watching grass grow….grass won. : )
Please I am a promoter in telexfree from Ghana in africa. i have been following the court issues with telexfree but will like to ask what is the latest update about the case?
I and my team are very disturbed since we just introduced new members and the system just went down. are we going to get some refunds?
Simple: because until you get it into YOUR PERSONAL eWallet, it’s still Telexfree’s money, and that’s affected by SEC/Mass asset freeze order.
None. No news today.
If you are, it won’t be for 2-3 years. That’s how long it took Ad Surf Daily, and Zeek is still ongoing.
there any news of today’s hearing?
It’s coming. The legalese is doing my head in.
I am from Uruguay, I understand that the process take back what I invested time, what are the actions that I take from here to complain?
The bankruptcy petition was approved on an interim basis. A final hearing on the matter will convene on May 2.
Telexfree is being afforded the same due process of law as any other company so interim approval is very neutral news. The hearing on May 2nd should be definitive.
At that time the SEC is sure to argue that the creditors would get less if Telexfree continues to operate than if it is immediately liquidated.
About three months from now you will be able to file a proof of claim. Wait for news concerning that.
Technically, I think the “first day motions” are approved on the interim basis, but I’m not a lawyer.
The first day motion to jointly administer the estates gained interim approval. The other first day items are continued with no relief granted.
Legalese hurts my brain. Ouch.
And we’re live – https://behindmlm.com/companies/telexfree/doj-file-objection-in-telexfree-bankruptcy-application
I think I’ve covered everything to date.
I would have kept people UPDATED with factual information, and I would have been careful not to spread “false hopes”.
Let people find some of the information themselves, so you don’t need to work too hard collecting information. Simply give them access to some sources.
I have posted some information in another thread, identified as “More info to Rwandans and others”. Others = anyone living outside USA, asking questions about the TelexFree shutdown.
Currently we don’t know enough about the legal actions to post anything specific. I focused on identifying some different types of sources in that thread.
Update from Patrick Pretty:
I sympathize with your situation of having quit your job because of your initial success in TelexFree and your having to deal with your medical bills. From your post, it seems that you have actually made your initial investment back and you should consider yourself very lucky for this as there are countless who will never be extended this privelage of making their principal back from this scam.
In general, it is difficult for net losers in this scheme to read about those posting about making their investment back from TelexFree and making profits. It’s like getting your mistake in joining TelexFree, as well as the money you lost, rubbed in your face. Knowingly or not, those who have promoted and profited from TelexFree are participants in an unprecendented fraud and scam.
In terms of EWallet access, even though they are a separate company, the “money” you “transferred” over there from your Back Office was basically frozen once TelexFree filed for bankruptcy and unilaterally decided that they no longer had to honor contracts to its promoters. That freeze was cemented when regulatory agencies placed an asset freeze on TelexFree and their crooked managment and top promoters.
Plus EWallet itself is a shady company that does business with many companies that are engaged in fraud even though they claim to have performed their “due diligence”.
EWallet cut all ties with TelexFree shortly after their bankruptcy filing so it should say something about TelexFree when a shady bottom of the barrell payment processing company like EWallet does not want to do business with you…
Filing of an application by ISG-Telecom on behalf of TelexFREE is not the same as co-signing it as you have declared. Mr. Merrill was the sole signatory of all applications, attestations, affidavits, sworn statements, etc as to the accuracy of the information provided to the Commissions.
Mr. Merrill is 100% responsible for their misrepresentations to the Commissions. All applications executed by Mr. Merrill and filed with the help of ISG-Telecom Consultants were done nationwide prior to any bankruptcy or SEC filings.
There is no way ISG could have known what might have been forthcoming to TelexFREE. Its obvious they were kept in the dark as to the legal wranglings of the feds.
Attempt to weasel your way out of it all you want chief. No amount of excuses will wash Isaacs of his involvement in TelexFree. And I don’t recall stating Isaacs signed the forms (haven’t looked through all the comments mind).
And what, you think TelexFree became a Ponzi scheme only after the filings?
Even the slightest of due diligence would have revealed what TelexFree was.
The various investigations were confirmed well-before TelexFree filed for bankruptcy. Enough excuses, man the fuck up and accept some responsibility.