telexfree-logoAs 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.