TelexFree exit strategy thwarted, millions recovered
As agents from the FBI, Department of Homeland Security and Immigration and Customs Enforcement burst through the door of TelexFree’s Massachusetts head office, Joe Craft looked up from his laptop.
“They’re early”.
Craft had been running his laptop day and night in anticipation of a raid, deleting the mile-long paper trail that he hoped would throw regulators off the scent.
Realizing he was out of time, Craft slammed the laptop case shut and began scooping up the checks he’d written into the black sports bag he’d kept under his desk.
This is what they’d rehearsed and early or not, it was going to work. It had to.
As agents secured the premises and made their way through TelexFree’s offices, Craft got up calmly and headed towards the exit.
A guard stopped him at the door.
“Who are you?”
“Me? uh…”
The harsh office lighting caught the drops of sweat that had begun to bead on his forehead.
“I’m just a consultant, I’ve been helping TelexFree with their bankruptcy application.”
“What’s in the bag?”
“Oh this? Nothing important. I just got back from the gym, it’s just some personal stuff.”
“Hand it over.”
Craft froze. Seconds passed and the tension mounted.
“I said hand it over.”
Letting out a soundless sigh, Craft placed the bag on the table and surrendered. This wasn’t what he’d rehearsed. This wasn’t how it was supposed to play out.
As the FBI agent rummaged through what was supposed to see Craft and his accomplices through the next few months, he began to reflect on his life. On the choices he’d made that had led up to this point.
Empty-handed or otherwise, was he going to make it out of the office a free man?
“Hey Frank, you’re gunna want to come and take a look at this.”
Joe Craft would later be identified as one Mr. Joseph Craft, Chief Financial Officer of TelexFree and likely architect of the disappearance of over $300 million in investor funds.
Inside his bag agents of course found his laptop, and $37.9 million dollars in cashiers checks.
The checks were written in the last week and made out to James Merril (50% TelexFree owner), Carlos Wanzeler (the other 50% TelexFree owner), Katia Wanzeler (wife of Carlos Wanzeler) and TelexFree LLC (owned by Merril and Wanzeler).
Another check for $10.3 million dollars was made out to TelexFree Dominicana SRL. This check is now all that remains of the thwarted exit strategy that was to see TelexFree’s owners rendezvous somewhere within the Dominican Republic.
To this end only days earlier, James Merril had begun liquidating some of his assets.
On April 15th at 7:30 am, James Merril submitted an unsolicited order to sell $1,150,000 of his mutual fund holdings at Waddel & Reed and to transfer the funds to to a Middlesex Savings Bank.
Now, with TelexFree investors from around the world reeling from their losses and hundreds of millions of dollars remaining unaccounted for, the race is on to recover what’s left of the TelexFree Ponzi empire.
Stay tuned…
Footnote: I might have taken some liberties in exactly how events went down at TelexFree’s offices, but I thought it made for a more interesting read than “Feds nab prime suspect attempting to flee the scene of the crime”.
You can read the full report from the SEC describing the events above over at their website.
There’s something I don’t understand. Why the accountant kept working from the office when a raid there was very probable? Couldn’t the engineering be made from home? And why keep all those checks there, some of them written days earlier? Seems utterly stupid.
I think it goes without saying those running TelexFree aren’t the sharpest tools in the shed…
TelexFree CEO in hiding Stuart “I’ll turn this company around by focusing on a product that nobody buys” Macmillan hasn’t been seen or heard from in days.
Last we heard, Labriola said he was on a plane “heading south”…
Wow…stealing the investors money. I wonder how it would of played out if they didn’t get caught. Tell affiliates that they got hacked and some hacker stole all the funds?, while sipin champagne on a beach somewhere?
Glad they got caught!!! Assholes!!
Great job Oz thanks for the mental picture, we might see this on the tele one day. No pun intended. ..lol
Some great writing.
This. Is. Not. Sleeping.
But bravo, nonetheless, as you’re approaching 48 hours up with no sleep.
Such a crazy and yet sad story!
People losing their life savings, killing themselves,losing their homes etc… While others are buying new furnishings for their new homes, laundering millions into offshore accounts, living the big life on their greed.
I hope the law will make an example of these people.
I had a nap for a few hours earlier. I’m good.
Zeek was a bitch though, I think I went some three days on next to nothing.
Trying to wrap this in my head. Did telex scammers had the intent to steal peoples money from the begining ? or did they get so big so fast like Zeek that they couldn’t go legit if they wanted too. Just curious on how these scammers sleep at night.
Well Carlos Costa had a previous association with scams in Brazil, and according to the SEC was the one who made the suggestion Wanzeler go MLM with his Disk company (VOIP).
So that’s when they attached the whole AdCentral Ponzi scheme to Disk, renaming it TelexFree. Disk’s VOIP offering was renamed 99TelexFree and the rest is history.
I believe Costa might be the architect of the TelexFree AdCentral compensation plan but I’m not 100% sure. It would explain why he’s so defensive about it though.
Costa was Wanzeler’s top marketing associate in Disk, but that was pre-TelexFree MLM. Then he became the top affiliate investor (through his wife) and part-owner.
Sann Rodrigues jumped from one securities fraud to another when he signed up to TelexFree in early 2012. This clearly shows they definitely knew what was going on and what exactly it was they were running.
I’m going to guess it’s mostly the former (it’s a scam all along) with a little bit of the latter.
This seriously depends on how much of my theory that Sann Rodrigues is the real mastermind and Merrill / Wanzeler are just two judas goats / frontmen, is correct.
Given the amount of furious backpedaling by Sann Rodrigues even before SEC acted, I’d heavily suspect him as the mastermind, and Wanzeler/Merrill was only shown how much of a fraud it was later. They probably thought they’ll really selling long distance… at least for a little while. Then it’s “in for a penny, in for a pound”.
But I’m sure SEC is aware of this… They did mention Sann’s role in Universo Foneclub in their complaint.
Meanwhile, in a parallel universe in Madeira Island, top promoter Graça Luísa, looking very exhausted, just moments ago has announced that…
– Telexfree enjoyed a great victory: The court in Nevada decided 3 to 2 that Telexfree is not piramid;
– The request to pay 23 million $$ in taxes proves the company is legal and not fraudulent, because illegalities are not taxed in the USA;
– Please transmit this to all your affiliates and friends, that the courts in the USA have decided Telexfree is not a pyramid and it’s now absolutely guaranteed we will get our money back, so they can spend an happy Easter. The company will suffer some restructuring, but the money will come.
—-
This is so sad and cruel, I’ve lost the few respect I had for this girl. How can she give this kind of hope to the poor people here?
Part of me believes she may actually believe that pile of garbage she repeated from unchecked Telexfree sources, but ignorance and stupidity should not be an excuse.
Unless she escapes the island before payback comes, I doubt she will escape unharmed (morally or otherwise) from this. She already looks like a rag, and she’s only making things worse with this kind of promises.
That would be “DiskMatrix”, predecessor of TelexFree.
That’s the problem when you live in an echo chamber, otherwise known as a “reality distortion field”, or perhaps, “The Matrix”.
Real sad story but some how I can’t help it to feel this strange guilty pleasure to be following this exciting soap opera. Please tell me I’m not the only one enjoying this.
I personally know a few people involved in this pyramid scheme including a couple of employees… By the way great job Oz! Well written blogs… the most informative on the web.
Where do the die hard Telexfreers get their news from??? Seriously How can they be reporting the Judge gave his blessing to Telexfree to return to their operations this afternoon.
Well all I can say is that once they decide to wake up from their zombie state they will find themselves in a hellish nightmare they can’t wake up from.
Videos like this and people like graça luiza helped get more promoters into this ponzi scheme. Most Brazilians in Boston didn’t understand the logics behind the scheme so they trusted these people to join.
When the money was earned they didn’t cash it out they reinvested allover again and again.
Clinically, this is called “self-delusion”. Those with a “saltier” mouth would say “pulled from their a**es”.
Basically, they are “dealing” with the problem by “hoping” it’s all false, except they hoped so much, they actually believed their imagination. Then they put it on the Internet… and it’ll live on in infamy! Muahahahaha! 🙂
James Merrill told his brokerage to liquidate his 1.2 million in mutual funds. Is he a flight risk? Or will the Brazilian American community hunt him down first?
there are a lot more people that should be charged than the 8 people that sec already have. People that have already a history of running scams and frauds.
The only way to stop this kind of scam is to put some people behind bars if the feds do this people will think twice before joining a similar scam.
Publication of news Facebook : TelexFREE
TelexFREE has written :
They are now spreading this new.. its been translated by google.
Regarding the tax hearing, I’m holding off writing anything until I see an order. I’m treating everything related to the hearing as unconfirmed in the meantime.
One need only look at the mountains of garbage that has originated from the TF affiliate-base to appreciate just how unreliable they are. The added English to Portuguese and then back into English translations aren’t helping.
Given that ICE, HSI, and FBI are involved, rather than just civil agents like SEC (and sometimes, Secret Service), this is indeed being treated VERY SERIOUSLY by the US authorities.
You can expected CRIMINAL charges to be filed soon, hopefully a lot sooner than Zeek’s case (which took, what? 18 months?).
The truth is that most of these top promoters are now fooling more people with other schemes. While that professional “ponzy leaders” are not arrested and have confiscated they will go unpunished jumping from one schema to another.
The legal apparatus has been very slow to combat this type of crime. Until they are stopped schemes render millions into the pockets of these thieves. These people lie, invent things, hide and many other good people enter it. And most goes unpunished.
Actually it’s Spanish mixed with English… Spanglish if you will. Basically he needs more people in court to support Telexfree at next hearing. Everything else is unconfirmed bull****.
FTC and SEC attitudes are changing. Burnlounge was the first where major promoters are charged. This case proves it’s now modus operandi to charge top promoters.
One of these days, law enforcement will walk in with WiFi jammr and Cellphone jammers to prevent someone from issuing a remote wipe. 🙂
Though I seem to recall that a long time ago, some crook sort of anticipated a raid and had hidden a powerful degausser in the main door. When the raid came, he flipped a hidden switch and basically let the feds take everything. None of the records survived. 🙂 It may have been a movie.
In Brazil we not see much thing be made against the promoters. Aparently the justice think that they are victims too and with good lawyers I doubt some one will be legally punished. So they are working fine.
I see one promoter that started with telexfree, when blocked in Brazil, he goes to BBOM, when bbom was blocked too it back to telexfree USA and now he is with promoting paymony.
It seems that the brain lavage is so great that the victims not make anything against that top promoters, even with a lot of lies and fake promisses. When some hard thing happens with the scheme they start to say lies and distorced informations only to calm the people.
You may find it helpful to understand how these things have been handled in the USA, particularly since the inception of the Financial Fraud Enforcement Task Force (FFETF) by the Obama Government.
You can see the members of the FFETF here: http://www.stopfraud.gov/members.html which explains how the SEC, FBI, HSI, IRS and other departments became involved.
The normal procedure has been that the SEC first applies for an emergency hearing, using its’ civil law powers to halt the fraud immediately and to freeze any and all assets immediately.
This ensures:
* The fraud is stopped
* The money can’t disappear
* The assets and accounts are frozen
The criminal law system, on the other hand, can be slow and cumbersome AND more easily delayed and manipulated, which means the perpetrators have a greater chance of escaping with the loot and covering their tracks.
You only have to look at what has happened to TelexFree in Brazil to see the how the Brazilian and US systems differ and the benefit of using the SEC civil powers to stop further fraud.
This then allows the FBI and DoJ to take their time dotting the “Is” and crossing the “Ts” preparing the criminal prosecutions.
Two things arise:
1) Don’t expect any criminal prosecutions in the near future.
They’ll follow, as sure as night follows day, but don’t expect them to happen overnight.
Now everything is frozen, the prosecutors can take their time preparing the criminal cases, making sure when they finally nail the defendants, they STAY nailed.
2) The HYIP ponzi industry and TelexFree insiders will use the lack of criminal prosecution to try and convince the victims what has happened is only a technical problem or administrative oversight, that TelexFree will be back, or, it’s time to move onto the “next big thing” and develop multiple streams of income.
You’re seeing that already with some of the promoters recommending members join other ponzis to recover any money lost to TelexFree.
Some thoughts on TelexFree’s bankruptcy law manipulation attempts from an immigration attorney:
TLDR: TelexFree’s bankruptcy shenanigans are likely to fail.
http://news.jornal.us/article-681065.-Will-the-US-Bankruptcy-Laws-Protect-TelexFREE-.html
Then you should start petitioning the “hardliner” prosecutors to follow their American counterparts and go after the top promoters / divulgadores.
It never really had a chance. It was hoping that they can ram the bankruptcy through before the authorities act, but the authorities knew what they’re up to. They just had a bit of delay convincing a judge to sign the emergency freeze. And that freeze means the bankruptcy is already moot.
But the brazenness of trying to lie to law enforcement and try to sneak out with 36 million AND laptop full of info… that takes desperation.
I wonder if Merrill and Wanzeler and Labriola knew the office was already under surveillance or something, so they let Craft do the dirty deed?
“No I haven’t lost anything, Telexfree is starting again next week” said the Madeiran shopkeeper.
.. These delusions are an interesting part of the psychology.
Also the way you can find people who won, but almost no one will admit they lost… meaning people will get sucked into the next scheme.
…when’s the musical come out ? It’s so strange that something you can debunk in 1 minute with the “too good to be true rule” built into this gigantic story.
I’m just going to assume that any prayers by affiliates to have the Good Lord protect TelexFree from the inevitable fell on deaf ears.
Lesson: Never pray for the protection, well being, and prosperity of a Ponzi and its cohorts. Someone won’t be listening.
What Graça and other top promoters are trying to do is to create some kind of rage buffer. This way they will have a chance to get out of this without getting to an Emergency room.
Comments on #30 about American promoter counterparts is lacking in correct logical relation to Brazilian promoters.
TelexFREE is legit MLM company in US. So, what can you do? Can you charge illegal to these people who gamble in legit casinos?
Do anyone knows for sure if that hearing actually happened? Is there any reliable source where it can be confirmed?
FBI has arrested top pimp of woscerter MA and ask for carlos Wanzeler who’s not being found anywhere. And some brainwashed still say it will be back. Close the borders guys. They may have already headed to Mexico or canada
Re. the tax hearing. Wait for an order or notice to be published by the court. Until then treat everything as suspect. TelexFree affiliates have been going on about how the business is going to reopen since the day the Securities Division filed their complaint.
Ignore them.
@Jeff
I don’t know about first but I initially reviewed TelexFree in July 2012. I’ve been following the company ever since.
You can compare what I wrote almost two years ago to what the SEC and Securities Division filed in their respective complaints.
Really? So people who enter those scams are just stupid everywhere, as I see.
In Brazil they just change “casino” for “lottery”, when saying that same BS in comments.
Who are you trying to convince? Yourself? Freud can explain your disorder.
@marcelo “Woscerter” is a place?
What is your source for the arrests?
Nobody has seen or heard from Wanzeler, Merril or Stuart Macmillan in about a week now. They went underground the second the Securities Division filed their complaint.
Hi @ all!
Congrats for this website! I have been following this case as close as possible and, at this present moment Telexfree affiliates are happy as newer before!
I read hundreds of mails that state the court decided its not a pyramid or ponzi, that they are a legit company, bla, bla, bla!
Well…my question is: How is this possible?
After readind the 28 pages from SEC complaint I was convinced this company was already dead!!!
Thank you for your comment!
Keep up the good work!
It isn’t.
Never underestimate the delusion of people with thousands of dollars on the line.
http://www.kccllc.net/TelexFree
–> “Court Documents“, menu upper left
I was unable to find anything of interest. “Verified petitions” were about attorneys’ “Permission to practice”.
One example:
I’ve seen those as well, but despite not being well-versed in legal terminology, they don’t seem to tell anything apart from the intention of Telexfree going on court day 17. I’ve not seen anything showing they actually went, let alone what happened there.
All the allegations being made are based in some Latino Telexfree Team which allegedly was there, they seem to be the sole source for the current fuss about Telexfree “resurrection”.
Once I felt pitty, now it’s just simply DISGUSTING!
Are this check a real money? Like, if someone burn this check, they lost all the money?
In Brazil, if I do one check, this is nothing more than a paper that say: I want transfer this money for you. You need to go to a bank and do the transfer.
And about this check? What they means?
The top earners in the telex scheme are now moving towards another scheme called PAYMONY.
Marcus Franca from Brazil is already recruiting in the Miami area, metting with people to Join what he describe as a much better investiment than Telexfree with “heart and mind”.
And there are stupids already falling for it… Don’t they ever learn?
Unfortunately, the biggest mistake that some TF losing investors think they made is not getting into TF early enough and/or not withdrawing their money fast enough. Forget law and ethics.
This motivates them to get into the next MLM opportunity earlier so that it is more profitable for them. And, honestly, I don’t think most of them are bad, evil, or even stupid people. They are just blinded by greed.
I read the above blog entry and didn’t see if Craft was arrested or not. Did they just take his bag and laptop and set him free to go home for supper?
It means that someone tried to transfer this money from an account at Wells Fargo to Telexfree LLC just days before Telexfree LLC filed for bankruptcy.
It means that someone was trying to protect the money from Telexfree LLC’s creditors (the divulgadores.)
Most likely the Wells Fargo funds were money collected from affiliates and Merril was attempting to get the funds into the bankruptcy estate where the divulgadores could not get to them.
I can’t tell if the check was cashed, but probably not since the authorities were freezing bank accounts when this occurred.
One of the primary reasons the State of Mass acted when it did, was to prohibit Merril and Company from transferring the divulgadores’ funds into an entity that was intended to be bankrupted.
As a result the funds are still in Wells Fargo Bank and available for much quicker and simpler return to the investors.
9 of accusations made by sec 5 of them have already been cleared for justice, just need 4, 5 and 3 judges were in favor of the company and 2 were counting and May 2 will have another hearing .. why do not you show this news to your followers! ta afraid to show the truth
Oh I dunno, probably because it’s complete horseshit?
This goes for any other TelexFree zombies from South America, please don’t try to spam your bullshit news updates here.
What your cousin told you over the phone that he heard from his neighbors dog who has fleas that supposedly attended the tax hearing is not a reliable source.
the video shows the president imprisoned for the check … cade video. if he was caught trying to run away with a check for 16 million then he is in jail .. where’s the video ….. and stop crying .. and the video shows him stuck … zombie. here in Brazil has some like you who works in a pyramid called herbalife and co.
With all due respect, exactly how fucking stupid are you?
Video of what? Him going to jail?
Assclown the SEC have filed papers in court perfectly describing the circumstances Joseph Craft was caught trying to run off with $37.9 million. But oh no, this guy wants “a video”.
You don’t think Craft’s attempt to flee and obstruct justice won’t be added to the criminal charges that are pending? Zeek Rewards’ mastermind hasn’t been criminally charged yet and that was two years ago.
I only just read another Ponzi scammer getting sentenced yesterday, their scheme was shutdown in 2008.
Please go an educate yourself, your “here in Brazil” comebacks are a waste of both our time.
Cashier’s Check, also known as “bank checks”, are “purchased”, and money is removed immediately from the purchase account. However, if you lose it (or destroyed), it will be considered void after 90 days, and money put back into the original account.
You seem to be mixing several independent events together.
“3 judges in favor” is not a fact. There is ONE judge in Nevada presiding over bankruptcy. That is delayed.
SEC is filing its charges on Massachusetts. SEPARATE ISSUE, different state and region. US is a very big country like Brazil. Different provinces.
It would make more sense for you to look at map of US, where is Las Vegas, Nevada, and where is Boston, Massachusetts.
Then remember, SEC is Federal agency, so its jurisdiction is national.
Please read some FACTS, like those published in newspapers. You are using translator, so you can read using translator too.
Do NOT believe what other PEOPLE are telling you. They do not verify their information are the truth (or not). You have to do this yourself, instead of “trust” other people to do it for you.
During the tax hearing, Carlos Castilho was live with some other telexfree affiliates. He is well know by the MMN people in Brazil. He said someone called Marcelo Morais was in the courthouse and was repassing what was going on.
During his talk, Carlos Castilho was receiving and reading news from Morais. So, Morais was the one who started the lie about the five judges and the victory of Telexfree (3 x 2).
Carlos Castilho said also that PP Alessandra Marques was responsible by the SEC’s action. She posted on her facebook (4th April) that the defeat was near. That post is being used as a prove of her manipulations.
hmm … in kampala uganda we are eagerly waiting for telexfree come back.
We have really invested in alot, atleast if we can get our initial investment back we wont mind the next proceedings of telexfree.
@ Nick
I for one would be more than happy to etradite the dogs and ponzie pimps right on over to Uganda as soon as we’re done with em here in the USA.
Don’t hold your breath on the refund.
I would like to say that telexfree and most of these hype, revenue shared programs, false mlm are all pyramid schemes. i know it and i suppose most of the ppl involved know it if not they are stupid.
i for one i like to study them all see how they work and i invest in them not a lot mostly a few thousand dollars per program and i usually come out with profits.
for me its a game if i can find a way to use the program in my advantage, i don´t recruit no one, you may think of me been greedy but i see it has going to a casino and counting cards.
yes the money comes from new investors but they already giving it to the company on there own free will.
That didn’t surprise me. “Eagerly waiting for TelexFree to come back” is more acceptable than “financial nightmare”.
Local financial experts in Uganda will see it as a financial nightmare. Local investors will typically focus on their own HOPES rather than on the REALITIES.
Here’s an article from Uganda: redpepper.co.ug/dont-say-we-didnt-warn-you-telexfree-files-for-bankruptcy-billions-lost/
From the linked article:
@ autoempleoya
Hmmm you must not read this blog that often because if you “did” you would know that your assinine comment would only be met here with a comment back to you of….your a low in morals moron.
( that was actually one of the kinder slams but it’s Easter for me today so I have to be a bit nicer )
@ Dorothy
Thanks for your nice comment, i follow this blog quite a lot and i see most of the reactions off ppl, thanks too this blog i can usually tell when too cash out of a program and is one of the tools i use to know how long will the program last.
Plus i have invest in programs that i never heard off them until i read them here. So maybe i should give OZ a comission for that LOL
We have already identified that to be “legitimate and normal use of information”. People will use information for different purposes.
“Some will use it to find a program to join, and some will use it to avoid the same program. Some will use it for “other purposes”, whatever that might be”.
he seems to be the owner of the Encontrei na rede website and Facebook page, that’s repeating all the misinterpretations.
Frankly, there’s no proof that he’s in Las Vegas, except him claiming to be.
Joe Craft seems to operate or represent BWFC Processing Center LLC, the agent that registered TelexFree entities in Nevada.
sos.nh.gov/corporate/soskb/Corp.asp?1069230
BWFC is probably an abbreviation for Bridgeway Financial Corporation, owned by John Ewing. I found this on the internet:
From John Ewing’s LinkedIn profile:
Some of the missing money may probably have been laundered through that system. 🙂
John Ewing is the co-author of a book:
Not always having the full picture. Some of those people have been taken advantage of by “leaders” misrepresenting themselves–which is why you find leaders targeting certain groups they think might be vulnerable to “willingly” handing over money.
However you justify it to yourself, it’s still stealing. You can brag about it all you want, but it officially makes you a d-bag.
You’ll get 15% back of what you put in (not what you think you earned)… if you’re lucky… and it’ll be 2-3 years from now. That’s my prediction. And I may be too optimistic.
You can’t. You threw your money away. Don’t do it again.
You quoted the wrong guy, Hoss. 🙂
Ooopsy Doopsy