TelexFree lawyer describes company as Ponzi scheme
Earlier this week on Monday TelexFree had their formal appeal unanimously rejected by three judges in Acre’s Civil Court.
Despite the granting of a business crippling injunction and rejection of two appeals filed against it, TelexFree continues to talk up its current legal position. In additional ongoing efforts to appease their Brazilian affiliate investors, the company also routinely has its lawyers publicly reassure everyone that the Acre injunction does not pose a risk to the company’s operations.
Shortly after Monday’s appeal denial was handed down, TelexFree lawyer Djacir Falcão acknowledged the company was “going through a difficult situation” but that it was “not at risk of bankruptcy”.
Fellow lawyer Horst Fuchs later echoed Falcão’s statement, claiming
the new defeat (does not) endanger the survival of the company. There’s no chance of that happening.
The catch 22 here of course being that with little to no retail activity, it’s quite obvious that TelexFree use affiliate investments to pay out existing $20 a week guaranteed ROIs. It would therefore logically follow on that if the company can’t recruit new investors and take in new investments, they’re ROI liabilities would eventually cause bankruptcy.
TelexFree of course can’t admit that, because they’d basically be confirming the company is a Ponzi scheme. Yet that appears to be exactly what happened yesterday.
Quoting the newspaper Rio Branco, Tribune da Bahia reports
According to TelexFree’s lawyer, Djacir Falcão, if the injunction continues the company may enter into bankruptcy.
“Running the company really becomes difficult because of the court decision, so we will appeal,” said Falcão, quoted by the newspaper Rio Branco.
The lawyer tried to appeal to judges on the grounds that should the company spend a few more days being prohibited from signing up new investors, they would have no money to pay the old ones.
The comments by appear to have been made by Falcão at the filing of TelexFree’s injunction against the Acre injunction yesterday.
Whilst I for one applaud TelexFree’s new-found sense of honesty amidst a sea of lies about insurance contracts, approval of said contracts and the general mountain of misinformation being fed affiliates, unfortunately it appears Falcão’s honesty was a once off.
Following the courtroom session in which Falcão made the above comments, he then
called the press to backtrack on the allegations he made on the floor, saying that “this scenario does not have to happen”.
Right you are Mr. Falcão, right you are. Say one thing in court and then when you walk out the door, feed the public and media a completely different story.
In related TelexFree news it appears that, unlike his business partners Carlos Wanzeler and James Merril who are currently MIA, Carlos “hockay?” Costa appeared to testify ‘on the activities of the company‘ after being subpoenaed by Public Prosecutors in Acre.
As the investigation is ongoing however, no information about Costa’s testimony has been made public, nor has any indication as to when the Public Prosecutor’s investigation will conclude.
TelexFree announced yesterday that they’re expecting a preliminary decision on their injunction filing “later this week”.
Will a judge grant TelexFree’s injunction based on Falcão’s argument that should they continue to be prohibited from signing up new investors to pay off existing ones, TelexFree faces bankruptcy?
Stay tuned…
They need to fire that lawyer. He not only just gave the prosecutors a shovel to use to bury Telexfree with, he rolled up his sleeves, dug 6 feet deep and then just pushed the company in the hole, hopped back out, wiped his brow, then handed the shovel back to them and left them standing next to the mound of dirt as he walked out.
Wow. Can’t all that ponzi money afford a better legal defense than admitting to what the other side is accusing you of doing?
I read some supporters of TF are proposing that the judge lift the injunction and allow TF to continue making payments to existing members, but not allow the recruitment of new members demonstrating this way that TF is capable of sustaining itself without the infusion of new capital.
What you think of such an idea?
I agree with TelexFree’s lawyer, the company will go bankrupt if they can’t sign up new affiliate investors.
I am sure the USA telexfree ponzie gang is going to like that statement.
Very interesting website…
Could someone living in the USA answer me something?
I watched (heard) a video on Facebook earlier this week, and there was a man talking about the recent TelexFree investigation that went on air on “Fantastico” (wich I actually didn’t bothered to watch).
The man talked about the good parts of what went on air, and also what he disliked on it. He also said people should stop judging what they don’t fully understand, and that’s what got me interested. He said that the MLM business is very misunderstood in Brazil, but in America it is responsible for around 30% of the GDP.
It sounded strange to me. Are there online documents you could provide me that would clarify that statement? Or maybe he just pulled it out…
I have two friends that got themselves sucked into TelexFree and you should have seen the face of one of them when I shew him Mapfre’s website stating that they have no bonds with TelexFree. Well, it wasn’t lack of warning…
Thanks in advance.
By the time this case and all other investigations are over, Carlos will have spent all the hidden money on lawyer fees and might have enough left to buy himself a new pen and stacks of paper to write letters while he is in the penitentiary.
I’m not a numbers guy, but this might help in your research.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29
That is nowhere near the actual figures, Nabucodonosor.
The 2012 Direct Selling Associations’ own figures indicate projections for 2012 retail sales for the Direct Selling channel were USD $31.63 billion.
Compare this with the official USA 2012 GDP of USD $15135.85 billion and you can see someone is playing with the truth somewhat.
I just received a recording of a USA based national conference & investor recruiting call that was recorded earlier today where the team leaders from one especially aggressive yet very naive group out of Southern Californians continued to ‘pitch the bitch’ as they say in ponzidumb.
The leaders acted as if they had not a care in the world! Playing stupid as a fox in order to get new money in after the old money.
They acted as if they had not a care in the world!
Failing to fully (or at all) disclose the troubles and civil matters before courts with the Telexfree family of companies is criminal.
Using the old fraudster line that there are no guarantees in life so why would anyone need them with the Telexfree program does not meet the test of disclosure required for integrity and fair play.
This is fraud by omission at the very least and probably will be construed as outright fraud with intention at the other end of the spectrum.
It’s a very clear marker of the intent of these people, more importantly though its speaks volumes about their character and integrity.
If anyone is using behindmlm.com as a tool for due diligence and does not understand that you should avoid Telexfree and the marketers on these calls then you are in for a rude awakening, then you are either very misguided or you are a willing perpetrator in the criminal enterprise and you will end up paying in the end….time is running out for you all.
The idea is terrible, unless TelexFree can prove they have enough money to fulfill each contract = prove they’re not a Ponzi scheme.
A Ponzi scheme is bankrupt from Day 1 in itself, and it can’t legally pay anything to the investors other than returning the investors’ principal investments. It can’t legally pay any ROI or dividend to investors.
When a Ponzi scheme has been shut down, net losers and other creditors can file creditor claims against the Estate like they can in any bankruptcy. The Court has to protect the creditors’ rights, and treat each of them equally = similar types of claims have similar rights.
People who already are net winners don’t have any rights to get paid more than they already have. Their net winnings are technically “ill gotten gains” = money that belongs to the creditors. They have had an “unjust enrichment” at the expense of the creditors, and the Estate will have claims against them on behalf of the creditors (“clawback”).
The company is not insolvent yet so anything is possible if the court can be convinced but whatever comes, it will likely take place in bankruptcy Court. That is the normal venue for restructuring a business or providing for an orderly shutdown and liquidation.
The likelihood that TF would be allowed to continue making payments at current levels is about Zero.
Yes, that’s exactly where he pulled it out of… his… culo.
LRM already gave you the figures, but here’s the citations.
From DSA: $31.63 Billion in 2012, estimated, all direct sales, not just MLM.
http://www.dsa.org/research/industry-statistics/
And the US GDP: 15.7 trillion, or 15700 billion in 2012
http://en.wikipedia.org/wiki/Economy_of_the_United_States
That’s like 0.2% at best.
There are a LOT of bull**** spoken by MLMers in Brazil… like Harvard teaches MLM? They do not. A separate organization, “Harvard Business Review”, have studied some MLM companies.
The lie stemmed from one person who wrote a book in 1984 claiming that Harvard teaches MLM. She cited no sources, and Harvard itself have refuted this many times. It was even covered in Wall Street Journal in 1995.
http://www.pinktruth.com/mary-kay-facts/not-taught-at-harvard/
MLM is widely misunderstood… by its PROponents and its supporters. We critics actually understand it much better than those people.
In the United States in 2012, GDP was about $15.6 trillion. There is zero chance that MLM was responsible for 30 percent of this sum. Put another way, there is no way MLM contributed $4.68 TRILLION to the economy.
The Direct Selling Association — in a news release dated June 11, 2013 — said this:
Walmart, on the other hand reported that its net sales in 2012 totaled $443.9 billion.
Source:
http://www.walmartstores.com/sites/annual-report/2012/CEOletter.aspx
Put another way, Walmart outperformed MLM/direct sales by a ratio of 14 to 1.
PPBlog
You guessed right. MLM supporters typically LOVE exaggerations, so you can divide the 30% by 10 = 3% of something. “Something” is normally the total consumer market for all types of products and services.
MLM may have up to 5 or 6% of the consumer market in some states, e.g. Utah, but the average is probably closer to 2 or 3%.
TelexFree isn’t MLM, it’s a Ponzi/pyramid hybrid disguised as MLM. Most of the money paid in to it came from investors investing in multiple AdCentrals / Family Packs, an income opportunity rather than a product.
It’s 90% investment fraud and 10% MLM, and most of the investors were probably not very interested in the MLM part.
He wasn’t very specific? He assume people don’t understand something, but he’s not very able to “put words to” what he feel they don’t understand, other than his own misguided ideas about 30% of GDP.
“Something” has to be about a fraction of the consumer market, not the total market.
It’s more like “MLM supporters will cite anything they feel supports what they think is MLM without any factchecking / skepticism”
Most MLM supporters will not make up facts like that. They generally heard it from their upline and simply repeated it like parrot / sheeple.
It’s the MLM “leaders”, who’s determined to gather up a team and profit off of them, that will often resort to exaggerations to “prove” his or her case. They will turn any MLM into a recruiting game.
The lawyer’s name is actually Djacir Falcão, not “Hawk”. It seems you used an automatic translator, changing his surname Falcão (Portuguese for falcon) to Hawk.
Thanks for the correction Igor, I’ve updated the article accordingly.
Another correction: Bahia is a state in Brazil. “Tribuna da Bahia” is from Salvador (you can see in the bottom of website), the capital of state, not Rio Branco in Acre.
http://en.wikipedia.org/wiki/Bahia
Now Telexfree affiliates have their own AISPA and are trying to sue the State for stop their ROIs and recruitment commissions:
https://www.facebook.com/pages/Unitel-Associa%C3%A7%C3%A3o-Nacional-dos-Divulgadores-Telexfree/261462763991927
Well, it appears that the TelexFree reps, et al., are paddling their arms harder while the water slowly creeps up to their necks.
And I wouldn’t doubt they’ll be defending TF and singing its praises while fully submerged under water.
That got to be a joke. Among their objectives, there is the creation of a National Political Party of MLM disclosers and the creation of a MLM undergraduation course!
Introducing the Telexfree church with Pastor Jose Roberto…
Other injuntion denied: http://stf.jus.br/portal/cms/verNoticiaDetalhe.asp?idConteudo=243289
If I read that correct, it seems the court TelexFree appealed to said, “Wrong court!” and told them to go away, right?
TelexFree Update #8 Carlos Costa (English Dubb)
Is there any truth to this?
http://tfmissoesrs.blogspot.com.br/2013/07/ultimas-noticias-da-telexfree.html
I didn’t know that former Iraqi Information Minister, Mohammed Saeed al-Sahhaf had a brother living in Brazil.
Do you believe some random blogger, or website of your Ministry of Justice?
http://stf.jus.br/portal/cms/verNoticiaDetalhe.asp?idConteudo=243289
I may be mistaken because the Port to English translations are not always clear but I believe that by the terms of the Acre injunction all contracts between promoters and Telexfree were ruled void.
Thus, so long as the Injunction is upheld Telexfree has no ROI liabilities, nor legally speaking did it ever have any since contracts for an unlawful purpose are void at inception and neither party has a duty to perform.
they were also spreading tht the injunction would “automaticaly expire” after 30 days, when what law says is that, after the injunction, the prosecutors have 30 days to fill the civil laawsuit against the company, what they already did
Uh, I thought “Rio Branco” was a newspaper? How did Tribuna da Bahia quote a state then?
@Kasey
As I understand it, following the appeal denial on Monday a group of affiliates (not TelexFree) then approached the Supreme Court. They were knocked back because the Supreme Court said it undermined the ruling of the Superior Court.
The reason this happened is I’m guessing no new evidence or reasoning was provided by the affiliates, they just rocked up and gave the ‘waaah, where is our Ponzi money’ routine. As such with nothing in the case having changed the Supreme Court said there was no basis for them to potentially undermine the Superior Court’s decision.
A “writ of mandamus” has been filed by TelexFree in the Acre Superior Court, which I believe is asking for an injunction nullifying the current injunction in place.
http://www.otempo.com.br/capa/economia/telexfree-entrou-com-recurso-contra-bloqueio-1.678240
That’s the one we’re waiting on a decision from. I think after it’s denied TelexFree then file something in the Supreme Court. Once that’s knocked back the next step is criminal cases being lodged against TelexFree management.
Oh and somewhere along the way affiliates realise they’ve been had by the company and riot…
PS. That latest TelexFree Carlos Costa video is only 2 minutes in length.
They’re getting noticeably shorter and shorter. How long before he does a runner and joins Merril and Wanzeler?
Allow me to explain what is happening to Mr. Costa and anybody else who claims they don’t understand what is happening in Brazil.
TelexFree ran a Ponzi scheme and now the authorities have caught up. TelexFree have failed to provide evidence indicating they are not a Ponzi scheme such that an initial injunction was handed down shutting down the Ponzi aspects of the business (recruitment and ROIs), and two subsequent appeals have been denied.
This is what is happening, and god has nothing to do with any of it.
@Hossy
The only thing the injunction prohibits are the aspects of the business that pertain to it being a Ponzi scheme. That being the recruitment of new affiliates and ROI payouts to affiliates.
The judge who granted the injunction said in a statement later that the injunction does not legally mean TelexFree is a Ponzi scheme, that is yet to be determined in court (when the PP file a case).
Given that operationally TelexFree is quite obviously a Ponzi scheme however, that’s why thus far the injunction was initially granted (based on evidence provided by the Acre PP) and two appeals have been rejected (TelexFree can’t convince a judge they aren’t a Ponzi scheme).
Contracts are still valid with the company (affiliate contracts), but of course ROIs will mean nothing if the company is declared legally to be a Ponzi scheme (pretty much a certainty given they are one in the practical sense).
It will probably turn out like Zeek Rewards, your ROIs mean dick, with top affiliates facing clawbacks. Being Brazil though how effective that will be I’m not sure.
Rio Branco is the state Capital of Acre, but it might of course also be a local newspaper. You have quoted it correctly, but the translation was rather vague.
At this rate when this is all over I’ll totally be able just jump on a pane and navigate my way around Brazil.
He has probably got more experienced. The lengthy parts of the other videos were typically about him introducing something that should save the company, e.g. insurance, USB telephones. He has simply dropped that strategy when it failed time after time.
I’m pretty sure he has been asked to change strategy by someone in the USA, e.g. Merrill, Wanzeler or someone else. He was ruining their strategies by drawing too much attention towards his own failed ones.
“Keep it short” is a much better method.
When the case in Acre first popped up, I watched one of Faith Sloan’s videos where she tried to minimize the case, showing a map of Brazil with Acre as a small dot on the map, deep in the jungle of Amazonas.
“How can that tiny little state have any impact? TelexFree is having some local trouble in one of the smallest states in Brazil, so we can simply ignore it.” 🙂
Can you repost a link to that statement. I sure thought the injunction included words to the effect that the contracts were void.
It said “We don’t have that jurisdiction, your case is flawed”.
A writ of mandamus is about asking a High Court or Supreme Court to pass an order to a lower court or government agencies, and demand them to make adjustments to their own orders when they violate other rules.
E.G. The ProCon Consumer Protection agency was ordered to remove public warnings against TelexFree because it violated rules about prejudgments, clearly identifying TelexFree as a suspected Ponzi scheme. That’s up to a court to decide whether or not TelexFree really is a Ponzi scheme.
ProCon CAN inform the public audience about its own cases and its own investigations, but it can’t jump to a conclusion before the case has been handled in court. It has to “neutralize” its own description when the case is presented to the public, e.g. use expressions like “potentially violating consumer protection laws”.
A writ of mandamus is typically about cases like that, “sue the government for violating rules”, to get a protective order against “the evil gub’mint”.
It was published as an interview in “Globo”, Thursday 20th or Friday 21st of June. You will find it if you search for …
“telexfree site:g1.globo.com“, specific period.
Here’s the original:
g1.globo.com/ac/acre/noticia/2013/06/decisao-nao-determina-extincao-da-telexfree-explica-juiza.html
I have also found the original information from MP/AC, translated, dated 18th June.
Oh Yes It Does, Oz. God is allowing the whole thing to play out as it should so everyone involved learns their lesson.
Heck, god is known for striking people with bolts of lightning just for being ugly, for cryin’ out loud.
This is not making much sense to me:
So the injunction sticks until the case goes to trial (who knows when that will be), but apparently (Acre) police are not permitted to continue their investigation?
I figure if the police have convinced four judges to deny appeals by TelexFree then they’ve already got solid evidence against the company, but suspending the police investigation (specifically them going after affiliates) seems a bit odd.
I know Carlos Costa has already been called to testify, is this TelexFree’s way of temporarily barring police from grilling Carlos Wanzeler and James Merril (both whom appear to still be in hiding)?
http://g1.globo.com/ac/acre/noticia/2013/07/decisao-liminar-determina-suspensao-de-inquerito-policial-sobre-telexfree.html
Thanks, the material you provided makes it seem unlikely that the contracts were found to be void. Between the many posts, sources, points of view and translations I guess I read something that was inaccurate. I sure remember reading it though.
That probably means the case is currently civil in nature rather than criminal. It’s just an order to the police to not interfere with the ongoing case before something has been decided by the Court.
The TelexFree case is ongoing in the Court system = it will be up to the Court to decide how to handle it. It has already decided a 30 day deadline for the Prosecutors to file a chargesheet in a civil case. The police doesn’t have the authority to overrule that decision.
The case may or may not be criminal in nature, but that’s currently not the main issue. If the police want to investigate it as a criminal case they must close the ongoing case first.
You read that the Public Prosecutor, MP/AC, planned to file something like that. She was probably inspired by the other lawyer who had represented some TelexFree affiliates, and was eager to beat him in the race “Last one to file a lawsuit is a loser”.
We haven’t heard anything more about those plans, e.g. anything about an extended injunction. The chargesheet may contain something about it.
That must have been it. At any rate its water under the bridge now.
Clearly Faith forgot how big Washington D.C. is in the US of A. Washington D.C. is not even a state! 😀
(Or how about how big is Israel in the entire Middle East?)
in their videos TF affiliates all the time say about “the female judge form Acre”, “the female judge form Acre”,”the female judge form Acre”, trying to make people believe that it’s a personal persecution against the company
It’s called “framing”. They need to make the fight “personal”, a “us vs. them” approach.
You may want to spread this video around a bit… a talk between Robert Fitzpatrick a MLM critic (he’s convinced that all MLM are illegal), and Steven Hassan, a cult expert, on what the two things have in common.
http://amlmskeptic.blogspot.com/2012/09/video-cult-expert-steven-hassan-discuss.html
It was actually fun to watch the video. She had googled “Acre, Brazil”, and found it to be “that little state?” somewhere in the Northern Region of Brazil, close to Peru, “deep in the Amazonas”. She even showed it on a map how tiny the state was (compared to Brazil itself).
The strategy itself wasn’t too bad. It’s better to identify something exactly than being vague about it, and she did identify the state exactly and “We have a situation in Brazil”.
The funny part was about “How can that little state cause any problems?”.
Carlos Costa’s new video, where he claims to be chosen by God, reads a text from the Bible and promisses to bring to the public a technical report showing Telexfree’s sustainability.
If I didn’t know any better, I’d guess they’re going to try and pass of fictional customers as sustaining the business model, without actually revealing the number of (non-affiliate) customers they have.
I hope the PP are ready to point this out.
Mathematically of course any Ponzi scheme is sustainable, because mathematically you can pump an infinite number of new investments into the equation. In the real world this is not possible.
Maybe he can also make a video on what he might think happened to the members that are MIA.
We can add “megalomania” and “delusional” to the list of afflictions.
Pretending to have evidence that will exonerate the company is also a common Ponzi tactic. Any one remember Craddock and “founder’s club” Zeekheads claiming to have evidence that will prove SEC didn’t have a case against Zeek?
If he had the evidence, his lawyers would have presented them in court already. He’s full of crap and he’s feeding the crap to the masses of TelexFree believers.
We need a derogatory term for the TelexFree believers. I suggest… Freeheads (nothing inside).
the journalist Luis Nassif, one of the first ones to openly denounde the scheme just posted on his blog a printscreen of an affiliate makes public death threats against him, and the judges of the case: http://www.advivo.com.br/node/1439136
I wouldn’t translate it to “female judge”, just to judge, as in English it sounds quite sexist, like if they were emphazising the fact she is a woman.
As you know, but our Anglophone friends might not, there is no neutral word for “judge” in Portuguese, it is either juiz (male judge) or juíza (female judge).
The real emphasis they are making is in the state of Acre, usually in a derogatory way. As was pointed before, Acre is one of the poorest and least populous states of Brazil and definitly the most isolated.
Here are some links showing the prejudice against Acre, testified by a lawyer of the state:
http://www.ac24horas.com/2013/07/03/advogado-revela-que-investidores-da-telexfree-teriam-dito-em-restaurante-que-o-acre-so-teria-jeito-no-dia-que-fosse-devolvido-pra-bolivia/
http://www.janelao.net/index.php/noticias/politica/1632-advogado-repudia-comentarios-depreciativos-de-membros-da-telexfree-contra-o-acre
Good point. All “latin-derived” languages, including Spanish, also have this problem.
But she only WORKS in Acre, right? Was she FROM Acre? Was she educated there? (Not that it matters one way or another, but that’s the sort of “reality distortion” that Ponzi members engage in.
They are rewriting reality to suit their fantasies. That means a cult (not really a religion), not a business.
Do you hear that all you Telexfree steeple? That’s the sound of the calm before the storm…
Be careful when you get on that bay cruise in the harbor of Newport Beach…watch for photographers, videographers and attentive tourists taking notes of your license plates and jewlery.
Also surely someone will walk into the so called telexfree office and report that there is really no telexfree building.
See:
– everybodygetspaidweekly.com
– 100percenttelexfree.com
in the Telexfree US home page:
telexfree.com/public/img/popup-extravaganzaCalifornia.jpg
Could be.
Anyone know what percentage of the world’s most renowned MLM attorneys they’ve met with to date to solidify the TelexFree stance on compliance?
Maybe some of the purported 80 percent JubiMax used are available now.
PPBlog
you really having an interesting exchange… but just food for thought how can a scam be able to partner with a company with such a legacy am talking about BESTWESTERN HOTELS…
What will happen to all this negative exchange if the company wins the case which it has almost done…..
Just about anyone with the right type of building can become a Best Western hotel/motel by purchasing a license and maintaining standards set by BW.
BW is a management and marketing company as much or more than it is a hotel company and a lot of their revenue comes from branding hotels that other people own.
Why Telexfree was building a hotel is anybody’s guess but they must have thought real estate was a better investment than their own company.
I am not so sure you can count on Telexfree winning their case.
@Janice
That’s easy, because they never did. Some contract was signed with an agreement to build a hotel. Do you honestly think that’s going to go ahead after TelexFree are shutdown?
Nothing. TelexFree was a Ponzi scheme before the case and will be one after. A business model determines whether a company is a Ponzi scheme, not a legal case. Courts only enforce the law.
As for winning the case. Yeah, dunno what reports you’ve been reading but appeal after appeal has been denied – based on evidence presented to the judiciary proving that TelexFree is a Ponzi scheme.
“Winning”, right.
Just 5 more days waiting for the BIG EVENT in Newport Beach CA, where all the ‘players’ at the top of the ‘thing’ (its not a pyramid!) get together to unveil the new stuff that Telexfree has put together.
The new product(s), the new cloud based platform, the financial product (scrub your credit file, jack your FICO and get a fresh start in life), the investment insurance policy, indeed the legal department will be there to prove once and for all (finally!!!) that the Telexfree program is legal, legitimate AND sustainable.
Get Your Tickets, don’t miss the Big Event! Bring your friends & Remember your AUDIO & VIDEO RECORDERS …Steve Labriola and the Telexfree & Team North Side teams are about to make history while setting the dis-tractors straight…100percenttelexfree.com….
BTW, whatever happened with those health products that were being promoted?