telexfree-logoNo doubt as a result of the TelexFree narrative taking on a life of its own these last few weeks, ironically due to a complete lack of communication by the company itself, yesterday saw the release of two official TelexFree corporate marketing videos.

Featuring Steve Labriola, TelexFree’s “Director of Business Development”, the two videos revealed little new information, but there were two interesting tidbits that I felt were worth going over.

steve-labriola-telexfree-director-of-business-development

The first was in relation to the SEC investigation. I’m regularly asked about the status of this investigation, but with neither connections inside the SEC or TelexFree, I’m only able to provide what is publicly known about the status of the investigation.

Yesterday Labriola revealed that

[5:49] A lot of people have asked me about Massachusetts, “what’s going on in Massachusetts?”

Well I’ll tell ya what. Massachusetts: We have sat down with authorities in Massachusetts, answered any questions that they have, presented all the documentation that they may need to look at… we are an open book for them.

The take-away from this is that the SEC investigation is not a dialogue between TelexFree and the agency. The SEC are investigating the company and requesting information from TelexFree that they need to complete the investigation.

As such, any changes to the compensation plan and/or TelexFree’s business practices are not reactionary, they’re anticipatory.

I suspect being formally investigated by the SEC has been somewhat of a wakeup call to TelexFree corporate, and now we’re seeing the taking of compliance more seriously, whereas before it was more of a joke.

In response to Brazilian Public Prosecutors filing a civial pyramid scheme lawsuit against the company, Carlos Costa, part-owner of TelexFree, declared “god used” him to create TelexFree and that “nobody will take it away” from him. That’s about as serious as TelexFree compliance got post SEC investigation.

Now TelexFree is hastily seeking to re-invent itself as a “customer acquisition company”, with Labriola revealing in his new video that

[00:56] Since March 9th, since our compensation plan has changed we have 550,000 new customers in USA alone.

And this brings us to the next point I want to address, TelexFree’s VOIP customers.

With alternatives such as Skype coming in at $13 a month, does anyone really think 550,000 schmucks materialized out of thin air to pay TelexFree $49.90 a month for an inferior service?

Hardly.

The compensation plan changes Labriola mentions have widely been panned by TelexFree’s passive investors, requiring them to

  • have at least 5 VOIP accounts signed up under their primary affiliate account and
  • personally recruit at least two TelexFree affiliates who in turn have at least 5 VOIP accounts signed up under them

TelexFree don’t care who signs up for or pays for these accounts, only that they exist so that Labriola can continue to quote impressive-sounding statistics.

The reality?

Shortly after TelexFree made their compensation change announcements, affiliates quickly cottoned on that unless the above requirements were met, they were effectively cut off from withdrawing the thousands of dollars they had previously invested.

Quick to spot an opportunity within an opportunity, it wasn’t long before third-party companies began to pop up to offer affiliates TelexFree VOIP customers for as little as “fifteen cents per VOIP account”.

One such company, TelexAutomation, advise on their website:

telexautomation-website

With Telex Automation you can create hundreds of VOIP accounts in less than 5 minutes!

We understand that your success is contingent upon hundreds of processes going just right.

Our team of developers ensures that you accounts are created quickly and with incredible accuracy.

TelexAutomation will automatically create VOIP accounts for each of your promoter accounts.

After creating the accounts you’ll receive an e-mail containing the usernames, passwords and invoice numbers for each account we created for you.

Placing an order can be done in 3 simple steps.

1) Create an account with us by clicking Get Started

2) Once you login to your account, you’ll tell us the promoters you want VOIP accounts created for

3) Last you’ll select how many VOIP accounts you want for each promoter, enter the customer details for the VOIP accounts (one time), enter your payment information and you’re done!

The entire process only takes a few minutes!

We only charge $0.15 (fifteen cents) per VOIP account. The minimum order is $3.00. If you are ordering less than 20 accounts you will be charged the order minimum of $3.00.

Previously TelexFree affiliates had to post ads to qualify for their ROIs, therefore prior to the new changes the money was in automated TelexFree spam publication services. Now that the plan has changed, it’s buying fake VOIP customers.

Despite featuring TelexFree logos prominently on their website, one can assume companies like TelexAutomation don’t have direct access to the TelexFree VOIP customer database. As such, they and every other VOIP customer selling company will be signing up fake customers through the front-end as required.

What information they are inputting into the system when they sign up the accounts in unclear, however by providing them on-demand, it’s clear TelexFree themselves are not verifying that any of the customers signing up with them actually exist.

This is somewhat curious considering the TelexFree “customer” sign-up page requires a “SSN or Tax ID” (123456789?).

But I digress, as long as that $49.90 fee is paid and Labriola gets his statistics, nobody over at TelexFree seems concerned about affiliates signing up fake VOIP customers for the sole purpose of withdrawing invested funds.

patrick-tarmey-founder-telexfree-automation-facebookAs for who’s running TelexAutomated, well there’s no information on the website indicating who’s running the company. However further research reveals that the owner of TelexAutomated appears to be operating out of Massachusetts, the very state the SEC are investigating TelexFree out of.

The TelexAutomated website domain was registered on the 22nd of March 2014, and lists a “Patrick Tarmey” as the owner with a supplied address in Massachusetts.

The email address Tarmey used to register the domain belongs to that of “Stronghold Airsoft”, whose website is hosted on the same server as that of TelexAutomation:

shared-server-stronghold-airsoft-telexautomation

Stronghold Airsoft appears to be unrelated to TelexFree, operating a “toygun” based business (think a pellet version of paintball):

Stronghold Airsoft is a 25,000sqft indoor airsoft course in Abington, MA.

For those who are new to airsoft, these guns shoot 6mm round pellets commonly known as “BBs.” They travel at speeds much lower than real bullets and although a bit painful when hit by one of these pellets, they cannot kill someone nor cause heavy-bleeding injuries unlike real guns.

Even though airsoft is considered a toygun, safety precautions should still be taken into account when playing with these replicas.

Whether Patrick Tarmey is an affiliate of TelexFree or is connected to TelexFree corporate in any way is unclear.

In line with the recent switch over to TelexCredits from USD, the emergence of fake VOIP customers brings TelexFree ever-closer to Zeek Rewards. Shutdown by the SEC in 2012, Zeek Rewards required affiliates acquire penny auction customers to dump “VIP bids” they’d purchased onto.

As such a market for fake Zeek Rewards customers emerged, with affiliates paying third-party companies to create customers for them to dump their bids onto.

TelexFree is slightly different in that the customer accounts and purchases are bundled together (there’s nothing to give away), but the principle is the same. Thousands, if not hundreds of thousands of fake VOIP accounts are going to be created just so TelexFree affiliates can withdraw their invested funds.

TelexFree affiliates could of course just actually sell the VOIP accounts to legit customers but, in addition to being an unattractive prospect to the company’s largely passive investment orientated affiliate-base, they’re also “impossible to sell“.

Give it a month or two and if the SEC make a request for information on the TelexFree VOIP customer database, what they get back should be quite interesting.

 

Footnote: You can watch the referenced Steve Labriola TelexFree corporate video below (published 5th April, 2014):