TelexFree’s 12th appeal denied in Superior Court
Around the seventh or eighth appeal, the TelexFree legitimacy horse was bruised, bloodied and bashed to a pulp. Now after the twelfth appeal, the carcass has long since decomposed and all that’s left are some bones and entrails. And still TelexFree management rattle the debris and kick at the dirt.
Adamant that paying affiliates a guaranteed $20 a week ROI using new affiliate investor money isn’t a Ponzi scheme, TelexFree continued their crusade of appeals in the Brazilian courts with the filing of an appeal in the Superior Court.
After being denied their final interlocutory appeal in the Civil Court of Acre, the eleventh such appeal filed in relation to the business halting injunction issued against TelexFree back in June, Carlos Costa and his band of merry lawyers took their fight to the Superior Court by way of a new appeal.
…and you can probably guess how that turned out.
Having failed eleven times prior at convincing Brazil’s judges that TelexFree isn’t a blatant Ponzi scheme, this time around the company sought to obtain a restraining order against Acre’s Public Prosecutors.
The idea being I suppose that, if granted, the restraining order would cancel out the injunction against the company, given it was granted at the behest of Acre’s Public Prosecutors. The restraining order would also prohibit the PP from pressing forward with their criminal investigation into TelexFree.
That’s right folks, run a massive Ponzi scheme and when the authorities come knocking, simply take out a restraining order against them. I mean, who are they to rain down on your Ponzi parade?
TelexFree’s appeal was filed on the 21st of August (if my translation is correct) and heard and denied yesterday on Wednesday on the 28th.
Having suffered twelve defeats in court, one would think TelexFree might finally realise that they have a better chance of proving the sky isn’t blue over the company not being a Ponzi, however that doesn’t seem to be the case (no pun intended).
Determined not to flee Brazil to join Carlos Wanzeler and James Merril, fellow TelexFree co-owners who are currently hiding out in the US, Carlos Costa made the following announcement yesterday on TelexFree’s Facebook page:
Dear affiliates,
Please be advised that due to the decision of the Supreme Court today, a new appeal is being filed with appropriate adjustments.
It’s important to note that there was no judgement on the merit (of the company) yet, which is why we remain confident that when the company’s merit is effectively analysed in the Superior Courts, we will win.
For reasons unknown, Costa appears determined to ignore the twelve instances Acre’s Public Prosecutors have had TelexFree’s appeal denied, solely based on the merit of the company and its business model via presentation of evidence against the company being presented to the judges hearing the appeals.
Stay tuned for TelexFree’s thirteenth epic court failure, coming soon to a BehindMLM article near you.
What about TelexFree USA? Are they ok?
Oz,
The bad news is that Telexfree is probably authorize Brazilians (living in Brazil) to register in Telexfree USA (still running) directly.
There was a meeting with the main leaders (the top 10 promoters), and they are positioning themselves to migrate their networks to USA.
Watch out, the news are coming within a few days…
USA is now going to suffer with this because of greedy Brazilian… I feel embarrased…
This is probably more M_Norway’s area (I’m strong on the MLM side of things not so much the legal), but I imagine once criminal charges have been filed in Brazil things are going to permanently stall in the US.
There’s too many liabilities to consider from an affiliate standpoint once the crime hammer comes down on them in Brazil. Money shuffling between Brazil and the US (which will attract attention), taxes in Brazil needing to be paid, banking channels in Brazil being monitored, the SEC…
The Court in Acre now has the orders it needs to halt TelexFree’s operation in other countries too, e.g. executing its own order through a Court in the U.S. (using the local Court’s personal jurisdiction).
One or two of the individual defendants in the case will probably try to delay an order like that for as long as possible, by filing an individual appeal to the Superior Court.
I have identified the case like this:
You have 1 main defendant and 3 or 4 individual defendants affected by the initial injunction.
1. Ympactus Commercial LTDA (TelexFree Brazil)
Carlos Costa, as CEO and main owner.
2. James Merrill, as co-owner
3. Carlos Wanzeler, as co-owner
Lyvia Wanzeler, as wife of the co-owner
TelexFree USA isn’t a defendant in itself, it’s an asset owned by the 3 individual defendants. It has been directly and indirectly involved in the illegal activities in Brazil.
The initial injunction was against the main defendant (the company), the 3 main individual defendants (Costa, Merrill, Wanzeler), and the one related defendant (Lyvia Wanzeler).
Each of the 3 main individual defendants will typically have individual rights and individual interests. A court can normally not use collective orders against a group of individuals.
Company and main owner can be treated as being the same party.
Husband and wife can also be treated as one single party, but they do also have the right to be treated as separate parties if they want.
Main owner and co-owners will definitely be separate parties.
Brazil is signatory to the same international anti money laundering agreements as the US and needs to maintain its’ international reputation ahead of hosting the next soccer World Cup.
Would YOU like to bet the US and Brazilian government is going to allow Telex Free to exist openly ??
The case isn’t about money laundering yet, it’s about “financial pyramid” as defined in an outdated 1951 law.
Some of TelexFree’s attorneys:
1. Horst Fuchs, main attorney
2. Djacir Falcão, several appeals to TJ-AC
3. Wilson Roberto Furtado, appeal to STJ in August
4. From memory: Eduardo Duarte (or something similar)
If I remember it correctly, Djacir Falcão was the one trying to get an injunction against the injunction, based on that the company could be unable to pay the investors if the Court wouldn’t allow it to recruit more investors.
FLAWED APPEALS
* One appeal to STJ Superior Court was rejected because of wrong type of appeal to wrong type of court (the case had to be finished in the lower court first).
* One appeal to TJ-AC was rejected because of missing court fee.
* One appeal to TJ-AC was withdrawn the same day it should be handled in court.
I seriously believe some of the appeals in this case have been intended to delay the case. 🙂
M_Norway and OZ, It appears I was partially mistaken. It will be in Europe, not US.
Please go on the Telexfree.com website, and check the new Address (in England). And also today was the very first day Telexfree update the USDolar conversion currecy in their website.
With all the statement from the top 10 promoters, and this, all points to the same thing:
They gonna migrate every Brazilian to their Europe network (technically not related, and where Brazilian Court has no jurisdiction.
I would like to hear your comments on that… I don’t know much about law, or International law, for that matter.
I really wonder how they are going to migrate everyone… by asking them to pay a new subscription? giving them a discount? not charging anything?
Information about the different types of jurisdiction:
http://en.wikipedia.org/wiki/Subject-matter_jurisdiction
Subject matter jurisdiction is the most important, but to execute an order the court will also need personal or geographical jurisdiction. A court can get that through another court.
Subject matter = the court’s authority over the case itself. The Court in Acre clearly has that jurisdiction.
The June 18th injunction was a temporary order (a pre-trial action). It had temporary jurisdiction for a limited time period of 30 days (6 weeks), banning some ACTIVITIES (rather than companies) for that time period. Filing of a charge sheet extended that time period until date of trial.
The August 12th order was a final order for the pre-trial actions = the ACTIVITIES are still banned until the case has been fully resolved in Court, or until the Court decides otherwise.
The August 28th order from STJ “verified” that order by denying the appeal. There may still be 1 or 2 appeal possibilities left for the co-owners to delay the August 12th order from being final. An order isn’t final if it has been appealed.
MIGRATING MEMBERSHIPS OR ENTITIES
The last date TelexFree “legally” could do business with Brazilian promoters was June 18th. The last date Brazilian promoters “legally” could do business with TelexFree was the same date.
Any payments they have made IN to TelexFree, or any payouts the have received from TelexFree after that date will violate the injunction. It isn’t about WHERE and HOW the transactions take place, or about WHICH entities they use to organize the transactions.
Paying for the monthly VOIP subscription may still have been legit after that date.
When a Ponzi scheme starts to move its operations around to other jurisdictions, it’s a symptom showing it is in its final weeks before a shutdown or collapse.
Telexfree in Brazil = Ponzi. Fact!
Thanks Mr_Norway, that’s what I suspected.
They will find a way to get by that… by having Brazilians registering themselves in another company, another country, which just “happens” to share the same name and website…
Let’s follow closely these next few days to see how this is going to unfold.
New information on Telexfree.com:
TELEXFREE LTD
15 BROMET CLOSE
WATFORD
HERTFORDSHIRE
UNITED KINGDOM
WD17 4LP
Company No. 08666840
Status: Active
Date of Incorporation: 28/08/2013
Country of Origin: United Kingdom
Good Lord.
Run that address past Mr Google, then try and work out how so many HYIP ponzis, autosurfs, fake forex trading and pyramid schemes could be run from the same address.
That’s a virtual office address, not a real company location. I’m finding dozens of companies at that same address, including a couple suspect ponzis and such already red-marked by WOT. Even a familiar name, Xplocial, is registered there.
Oh, and in case that doesn’t convince you, here’s the Google StreetView:
http://goo.gl/maps/KMxk6
Do you know say who are the owners of the UK Telexfree?
@Brasileira
Carlos Costa, James Merril and Carlos Wanzeler.
No information available. They didn’t even bother to file what kind of business it does.
Basically somebody paid for one of those “register a company in an hour” kind of deal.
http://www.ukplc.com/
In Spain, the Telexfree Ympactus is like here in Brazil.
It doesn’t really matter. If the network is permanently shut down in Brazil, it will be shut down in the rest of the World too.
The main battlefield in the case is the court system in Brazil. If they lose there then they have lost the whole war.
The defendants in the case in Brazil is the company AND the 4 individual defendants. They can copy as many clones of TelexFree as they like, but they can still be forced to shut them down through a court order.
The injunction also covers “extensions” to other countries, or extensions to other organizers than the initial ones.
If the organizers are setting up a new company to run the network, the network will still be illegal. If they expand the number of organizers, any new ones can simply be added to the list of defendants. They don’t need to add new COMPANIES to that list, only the new organizers.
The case isn’t about WHO’s running it or WHICH companies or WHERE they are located, its about the ACTIVITIES. But currently the freezing of activities is only executed in Brazil, but it will probably be extended to other countries when the August 12th order has become final (when all appeals have been denied).
“WHO’s running it” is only because they need defendants in the case. “You can’t order anything if you don’t have anyone to give the order to”. I’m not talking about hypothetical solutions here, but about realities.
Mr_Norway, you’re probably right. The issue is that Brazilian justice system is EXTREMELY slow. I mean, out of this world slow… specialists estimate that the main case of matter will only be judged and solved in one to three years…
So my concern is that they could open many “baby Telexfrees” in different countries and have people lose all their money in it, before some final decision is made through the Brazilian court… that’s our fear!
Same as they did with their initial US address… Deja vu?
This case will be slow too, but you don’t need a full trial to halt a company’s activities. All you need is the right type of order from the right type of court, an order that can be executed.
The June 18th injunction was a temporary order. It could be executed locally in Brazil as that, a temporary shutdown of some specific main types of activities for 6 weeks.
The August 12th order should normally be about the same, about the first order being backed up by a charge sheet and made final (no 6 weeks deadline). It will become final when all appeals have been denied by higher courts (STJ and STF).
STF should normally reject an appeal directly. Some people have already tried to file a “writ of mandamus” there = “people vs the government” about Fundamental Rights, using the idea that the Court in Acre have violated people’s fundamental right to participate in Ponzi schemes when it froze payouts and recruitment.
STJ have already denied the main appeal = they have reviewed the lower court’s decision and verified it. One of the defendants have filed another type of appeal. It should normally be rejected (but I don’t know what it is about). It will prevent the August 12th order from becoming final until the Superior Court have made a decision.
WHAT A SHUTDOWN IS ABOUT
A shutdown isn’t about the Court chasing defendants all around the World. It’s about passing the right type of orders to the right people, institutions or authorities.
Preventing new investors from joining TelexFree in Brazil temporarily was done by ordering the defendants themselves to modify the website, putting up a warning from the Court and disabling most of the recruitment and payment functions.
Freezing assets was done by ordering the Superintendent of Bank of Brazil to freeze specific bank accounts. The order was executed within 2 days, freezing $6 billion USD in specific bank accounts. He also reported the $101.7 million illegal transactions.
From the “Holy lack of formatting” notice:
Thanks again Mr_Norway, for the expertise comments!
Let’s just hope Brazilians authorities do their job then, rather sooner than later.
The SEC is aware of the operation of Telexfree?
Now, one of the top 10 Telexfree affiliates(who made more thaan US$2 million while the company was active) is encouraging people to massevely join Telexfree USA, bypassing the court order from Brazil http://facebook.com/photo.php?fbid=646592922027196&set=a.182581038428389.44129.181797531840073
And not the UK version, eh?
The main battlefield is the court system in Brazil. If they lose that battle, they will lose the whole war.
I understand that the SEC must be notified to investigate. Justice in Brazil is extremely slow and ineffective. And the deal also involves the Americans, the network on American soil and the use of U.S. banks to send money.
Yes, he is adversting US, not UK. Doesn’t really matter, since the website and system are the same.
But why the change to UK on the website, and omit the US? That’s what we wanna know.
Afiliates are very angry at this Top promoter (his name is Fernando Augusto) for putting a lot of hope in a “Victory”, and the “victory” was only for him, to start a new network in a good position. And also, because no one has money left to re-invest!
Yesterday, when Fernando Augusto made that statement on facebook, it was the first time we could actually see affiliates being really angry at the top promoters.
Brazilian’s would call Fernadndo Augusto’s move as a “shot in the foot”
Good. 5 stages of grief is taking its place. Anger, denial, bargain, depression, and eventually acceptance. The first 4 stages can go in any order and the victim can regress.
The longer they stay in denial and bargain the worse it’ll hurt. And scammers are out releasing false hope to keep them in denial and bargain for as long as possible.
My article is mainly about Zeek victims, but same applies to TelexFree.
http://amlmskeptic.blogspot.com/2012/09/victim-denial-and-cognitive-dissonance.html
Actually, no. SEC have lawyers and prosecutors that can initiate court cases by themselves. However, they usually are quite busy and prioritize cases. Request for cooperation from Brazil through Interpol goes a long way, as does complaints from within the US.
And they are well aware of the Internet. Investigators from SEC and FTC do keep track of Internet forums where the scammers hang out. Many printouts of such messages were presented at various trials of such scammers.
I kinda of agree. The more people notify SEC, the more it gets to their top of “priorities” list
According to reports, $88 million has been shifted out of Brazil since the investigation began.
The USA and Brazil are signatories to many of the same international anti money laundering treaties and I see no reason to believe what is going on with TelexFree in Brazil has escaped the notice of a large number of co signatories to the treaties, including and especially the US.
It isn’t about how many, but about the TYPE of information. Some types of information makes it easy to get an overview and make initial decisions about priority and importance, some types will either be too time consuming, too vague or too general.
The main battlefield is the court system in Brazil. Most likely, you can let the current battle (the last appeal) finish in Court before deciding anything about informing authorities.
There’s 2 authorities people can inform, but I believe they should wait a few days.
1. Public Prosecutor in Acre
2. SEC in the U.S.
They will need very different types of information, e.g. the PP can be interested in information about organized recruitment attempts like migration of downlines to other countries, while SEC will be more interested in general “quick overview” information.
But the general rule is “Let it play out in court first” = assume the Court will handle the situation correctly.
The Court in Acre has managed to SUMMON the defendants through a US court. It will probably manage to EXECUTE an order in a similar way.
I didn’t read anywhere that defendants were summoned in US. I know they were summoned in Brazil, but the court then was then informed they were living in US, and nothing else.
Where did you find information? By being summoned, do you mean they already gave a statement to the court/police? Thanks.
I found them listed as defendants in official Court documents. The rest is my own logics, “putting together available information and draw a conclusion”.
1. Civil procedure will require it. Defendants have the right to be represented in Court.
2. The “Letter Rogatory” method for sending Court documents to people living in other countries was mentioned early in the case, in the very first week.
3. TelexFree has minimum 2 lawyers filing different types of appeals to the same Court about the same decision, and minimum 4 lawyers total.
I’m looking at the information I HAVE, not the information I’m missing. And it points in the direction that more than 1 individual defendant are being represented by lawyers.
I think what M_norway meant was “responding to summons” also means hiring a local lawyer, i.e. the two folks in US hired some Brazilian lawyers to respond to the summons. As their clients legal representatives, they can respond to such summons.
I found something in a blog from July 5th, blog “IG – Senior Resource Group” (blogspot). I believe I searched for keywords “Telexfree letter rogatory” to find it.
Letter Rogatory is simply a method to send court documents via diplomatic channels, to a court in the other country, to the defendant or witness (the foreign Court will use correct procedure), and sending documents back the opposite way.
Ok. Got it!