TelexFree linked to “money laundering cartel”
Following a month-long investigation into TelexFree, Rwanda recently decided to ban the scheme. Upon announcing the decision, the Rwandan Ministry of Trade claimed TelexFree’s activities were “similar to that of a pyramid scheme” and raised concerns it was facilitating money laundering.
Now, in a followup report released by the Ministry, the Rwandan government is accusing TelexFree of tax evasion, exploitation and money laundering.
The TelexFree Ponzi plague arrived on Rwandan shores in mid 2013, with the company registering itself nationally as “PLI TelexFree (Rwanda) Ltd”. Then, over the next nine months, the company set about fleecing Rwandan affiliates and transferring their money offshore.
The Ministry of Trade’s report on their investigation reveals
that the company was involved in laundering an estimated to Rwf 7billion ($10.2 million USD) to foreign companies in the US and Germany evading taxation.
The report released by an investigation team led by the Ministry of Trade and Industry indicated that the company has been laundering money, evading taxes and exploiting Rwandans to the benefit of its foreign owners.
The funds TelexFree laundered out of Rwanda would have presumably be used to pay out existing investors elsewhere around the world. In light of the recent ban on TelexFree’s activities in Rwanda, what happens now to local Rwandan affiliate investors and their money is unclear.
Meanwhile I’m at a loss to explain why TelexFree was laundering investor funds through Germany. The US I understand, as that’s where the company is currently headquartered.
TelexFree currently use i-Payout to transfer their affiliate’s invested money globally, the only explanation I can think of is perhaps i-Payout are using banking channels in Germany.
With at least one government confirming TelexFree were engaged in money laundering, it follows on that this is a widespread practice company-wide. Prosecutors in Brazil have already raised suspicions of money laundering and embezzlement, with TelexFree also under investigation in the US by the SEC.
As of yet there’s been no official confirmation that the SEC’s investigation has expanded to cover the business activities of i-Payout, however it would appear any such investigation would be a fraud goldmine for investigators.
Despite i-Payout hiring Kevin Thompson to tackle client compliance last month, I’m still seeing the payment processor’s name frequently attached to schemes operating out of the MLM underbelly.
One recent example is that of Spinding, who offer affiliates position in six “cycler” queues. Affiliates buy into the queues for between $30 to $960, and then wait for their positions to accrue balances of $1 to $32, payable up to ten times a day. Balances are accrued as new positions are bought by Spinding affiliates.
i-Payout had no problems with this business model and threw their payment processor doors open to Nash, but apparently stopped short of offering him instant credit card processing. Nash decided this wasn’t good enough and went on to recently launch Spinding using a Chinese (Hong Kong) based credit card processor.
Apparently no US-based provider was willing to let Spinding use their network and take on the risk Nash was demanding of them. As I understand it i-Payout is still a non-credit card payment option within Spinding, giving you an idea of the clientele they bed with.
Call me cynical but I’d say at this point a separate investigation into i-Payout is almost certain, if instigated by nothing else than the fallout of TelexFree and the SEC’s attempts to track the scheme’s transfer of funds.
i-Payout have previously defended TelexFree’s infamous AdCentral business model, claiming the payment of $20 a week for 52 weeks per $189 invested by affiliates was “compliant with all US laws“. To date the payment processor has not issued any public statement on the SEC’s investigation. Whether they’ve been requested to supply documentation on affiliates to the agency remains in question.
Echoes of Zeek Rewards and their payment processor NxPay certainly come to mind.