The SEC’s delicious deposition of Faith Sloan
As part of their civil TelexFree case, on October 4th and November 5th the SEC deposed Faith Sloan.
Whereas Sloan certainly isn’t the first prominent MLM underbelly figure to be deposed, what makes this deposition unique is that the SEC has made the entire transcript public.
Sloan’s deposition provides revealing insight into the mind of a serial-scammer.
Her responses are simultaneously raw, incriminating and at times frustratingly elusive. But they’re nonetheless real and make for a thoroughly interesting read.
In essence, this is probably as close to an “ask me anything” we who keep track of the MLM underbelly are going to get.
Before we get into it, in some of the quotes below you’ll see questions starting with “Q.” These are questions directed at Sloan, with her answers preceded by “A.”
Oh and “Mr. Gossels” is Sloan’s attorney and Ms. Beirnstein is representing the SEC.
I’ve left in some of the attorney comments as the examples of Sloan and her attorney being put in their place are hilarious.
Sloan’s deposition reveals she moved into a new house with her mother and father in the months prior to TelexFree’s collapse in 2014.
Sloan’s deposition transcript provides detailed insight into her involvement in the MLM industry.
When asked how an MLM company works, Sloan answered;
Well, you sign up as an independent representative.
You’re not a consultant. And you build a team of other salespeople.
When asked whether ‘you also make money from the recruitment of others‘ however, Sloan answered, “No”.
Sloan also answered “no” when asked whether ‘multi-level marketing schemes have bonuses for bringing people in?‘
Q. Is it a problem if it’s making most of its money from the recruitment of new members?
A. I don’t know about any companies that would make their money primarily from recruiting.
Q. Okay. But if it did, would that be a problem?
A. I don’t know.
When asked to put together her MLM history, Sloan submitted IRS 1099 forms that showed her involvement in
- Usana (2011-)
- Gano Excel (2013 to 2017)
- Total Life Changes (2014 to 2016)
- Lucrazon Global (2013)
- Modare (I believe Sloan has incorrectly identified “Modere“, which she claims to not have made any money in)
- Epiq Energy (Sloan states she didn’t sell any Epiq Energy products and made no money)
- EPX Body (got involved in 2013 but failed to identify the company in her interrogatories)
These companies were briefly touched on but things really started to get interesting from RE247365 onward (2014).
Simply put, the SEC’s grilling of Sloan over RE247365 is delicious.
Q. For example, would you get any bonus for recruiting other people into — below you into your downline?
A. If they come in, they purchase a product — everyone comes in, they purchase a product.
Q. So would you get something like 50 percent of that, people coming in?
A. I don’t remember what we got paid there. I didn’t do much in it. Just like most of them, I didn’t do much in 2013, 2014. I was still disgruntled.
Did you post anything online regarding Relationship Energy & Services LLC?
Q. Was it also known as REBO?
At this point the SEC produced Exhibit 108.
I can’t say for sure but I’m 99.9% sure Exhibit 108 is BehindMLM’s very own “Is RE247365 a pyramid scheme? (Faith Sloan case study)” article, published September 2014.
In the article we used Sloan’s marketing of RE247365 to prove the company was primarily operating as a recruitment-driven pyramid scheme.
Here’s what happened when the SEC confronted Sloan with our article;
Q. And I represent you may have never seen this before. This was actually a post on a blog. And it was
4 originally posted back in September —
A. I don’t read this crap.
Q. I figured you probably hadn’t read it. I’m mostly interested in just looking at the screen shots from it. I’m trying to figure out, there’s some pull-down screen shots.
Q. Is that Relationship Energy & Services LLC?
A. RE247365, yes, it is. I don’t know whether it was called REBO.
Q. But if you look at the screen shots that are pulled on Page 2 of 3 and then 3 of 13, are those typical screen shots from that particular multi-marketing entity?
A. What am I looking for?
Q. Like you see the pictures. I’m good about pictures. Words are not as easy.
Q. So looking at the pictures, do you see there are various screens that show REBO, RE247365 Back Office, for example, on Page 2, do you see that picture?
Q. What I’m asking is, are these the screens when you were involved in Relationship Energy & Services LLC?
A. I don’t remember, but they could be.
Q. Okay. Now, I know you didn’t read this blog, but I’m going to ask if this is accurate. It says in this blog that, “The sole qualification for a commission is the ongoing payment of a $34.95 monthly affiliate fee.”
Was that accurate? Did you actually have to sell a product past —
A. I don’t remember at all. I really don’t remember.
Q. So were you selling anything to retail clients in this particular one, Relationship Energy & Services
A. In any one that I got into the deal, they were retail because they had to purchase something.
Q. So they had to purchase — so when you brought someone in, they had to purchase one product?
Q. Did they need — and so when they made money by bringing someone else in, they also only had to buy one product?
A. I don’t know.
Q. Was anything more than the one product per person being sold?
MR. GOSSELS: Objection. Could you rephrase that question? That was so many different components to that. To help the witness answer it properly.
MS. BERNSTEIN: Okay. Fine. Just say objection to form, and I got it.
MR. GOSSELS: That’s it.
BY MS. BERNSTEIN:
Q. You’ve described this one as it was retail because when someone came in, they had to buy a product, correct?
THE COURT REPORTER: Is that a yes?
MS. BERNSTEIN: Is that a yes? You’re going to have to say yes or no. I didn’t give you the spiel before the deposition.
Because it’s being transcribed and it’s — she’s not going to get nods of the head or gestures, you’re going to need to verbally answer my questions.
Q. You made money when someone came in below you who purchased a product, right?
A. I think so. I can’t remember how it worked.
Q. Did that person — but you didn’t have to sell any products to make money?
Q. You made someone from someone else coming in and buying a product —
A. If they came in, I brought them in and they purchased a product.
Q. Okay. And then they came in and they brought someone below them and they would purchase one product?
A. I don’t know one, 10, five.
Q. Do you have any understanding why more than one product per person was being sold?
A. I don’t understand that question.
Q. In other words, if you’re really selling like Herbalife, if you’re really selling a product, people sell more than one product, they don’t just buy the one product themselves, they go out and sell to other people.
Do you have an understanding in relationship to Relationship Energy & Services LLC if people went out and sold the product outside the affiliates?
A. I don’t know if other people did. I don’t understand.
Q. Did you do it? Did you sell the product to people other than to the people that came in below you who became members?
A. I made some calls.
Q. Did you sell any product?
A. I don’t remember. I don’t have my information. I really can’t remember.
That’s Faith Sloan getting cornered into admitting RE247365 paid affiliates to recruit through pay to play, with little to no retail activity taking place company-wide.
Immediately after that was established, this happened;
MR. GOSSELS: I just want the record to show that you’ve asked the witness about Relationship Energy & Services LLC.
MS. BERNSTEIN: Yes. Under the Federal Rules of Civil Procedure as they exist today, there are no talking objections.
There’s objections to form, there’s objections to foundation, but they’re not talking objections. So — we’re going to have a full day here.
If you object, if there’s a problem with form, there’s a problem with foundation, I will endeavor to fix it. If I need more clarification, I will come back and ask if I need to fix a question.
But generally every other objection is preserved, including relevancy, prejudice, all that’s preserved. So we don’t need to spend time about that now. Okay?
MR. GOSSELS: I hear you.
MS. BERNSTEIN: Thanks.
Q. By the way, one thing I didn’t say when we started is let me know if you need a break at any time.
A. A water would be great.
Q. Unfortunately — this is a federal government agency and I don’t have cups for water, believe this or not. This is this thing.
Trust me, I used to be on the other side of the table and thought this was ridiculous.
But it is what it is, so I don’t have the ability to offer you water and I’m sorry about that.
(Videographer gave the witness water.)
THE WITNESS: Thank you, sir.
MS. BERNSTEIN: Thank you. I appreciate it.
Q. Do you want to take a quick break?
Q. Okay. Can we place in front of the witness what will be marked as Exhibit 110?
BY THE WITNESS:
A. These guys, these jerks.
BY MS. BERNSTEIN:
Q. These guys, these jerks that you refer to, in Exhibit 110 this appears to be a 2013 miscellaneous income 1099 for Infinity 2, as the number, Global.
Did you earn income from Infinity 2 Global in 2013?
Q. You described them as jerks. Why?
A. Liars. What was their whole spiel? I can’t even remember. I know. They shut down.
Q. So you don’t remember —
A. I remember now, yes. They said they had a gaming platform where they had a relationship or a joint venture with a — I can’t remember mobile app or it was an online app or something like that and they were going to have these casinos and they were going to do all these great things and then they didn’t.
Q. But you earned some income in 2013, approximately $6100?
Q. How did you earn that income?
A. Because I know they had — they had the product, and I can’t remember the technology behind it, but I did introduce it to other folks who were excited about the product too and so I received commission from their purchase of the product.
Q. So your income from that entity was commissions on sales of product?
A. Yes. I think. I can’t remember all these guys. I just remember they were jerks.
Sloan’s bank statements also revealed payments to shady schemes, including $554.95 transferred to Preservation of Wealth.
Q. Going on to the Page 2 using those numbers I stuck on the document. There’s — the second from the bottom entry it says Preservation of Wealth, and there’s a charge for $554.95.
What is Preservation of Wealth?
A. Gold. They were a gold company.
Q. Were they a multi-level marketing entity?
Q. So what does that $554.95 represent?
A. I haven’t the slightest idea.
Perhaps I can fill in the blanks: Preservation of Wealth was a membership-based pyramid scheme launched in 2009.
Later in the deposition Sloan’s participation in the Better Living Global Marketing Ponzi scheme also came up.
Q. Right above it, the first entry is a wire transfer on July 19, 2013, from Hang — to Hang Seng.
A. Yeah. There was a company, I forgot about them, called Better Living, and one of my buddies, online, I always call them buddies, they’re not friends, suggested that I get into that deal.
I can’t remember what space they were in. And so they didn’t work out either. So I sent that directly to them. Yeah.
Discussion of companies continued throughout the deposition. But after initial discussions the deposition moved on to Faith Sloan admitting the destruction of evidence.
There is so much to unpack here… but I’m just going to let the transcript speak for itself.
Q. I placed in front of the witness what has been marked as Exhibit 112, which are your responses to the SEC’s request for production of documents.
Q. When did you become first aware that the SEC requested the production of the documents that are reflected in this document
A. I don’t remember. When I was first — I don’t know.
Q. Was it a week ago?
Q. Was it a month ago?
A. Probably something around there.
Q. Okay. And what did you do to attempt to comply with this request for production of documents?
A. I — let me see what the questions were. The first one was easy. I had nothing. The second one — (mumbling).
Most of my answers were from memory or from knowledge.
Q. Now, you responded to Request No. 1 — now, Request No. 1 reads, “All Documents concerning your involvement in promoting and investing in TelexFree including but not limited to, YouTube videos, presentations, communications with TelexFree, communications with investors and potential investors in TelexFree.”
And you said you had no such documents in my possession custody and control. Why was that the case?
A. The YouTube videos and my website that I had, in the complaint, it specifically told me to get rid of them.
So I got rid of the website and I got rid of the YouTube videos. I deleted them from YouTube.
Q. Who told you to get rid of them?
A. It’s in the complaint. It said — what did it say? It said immediately stop promoting TelexFree and you shouldn’t have your promotional material, I’m just paraphrasing, to promote TelexFree. So I deleted them from YouTube.
Q. But you didn’t keep any copies?
Q. Why not?
Q. Because you were under a Court order to not destroy documents related to TelexFree.
A. But I was also told to delete it.
Q. You were told not to actively put it on the web.
A. I was kind of confused because I said they want me to delete it but they want me to have it. But you guys have a copy of the videos because you referenced it in your complaint.
Q. By the time we tried to obtain them, they were already deleted. In other words, we saw them for the purposes of the complaint, but they were deleted in the interim.
You recognize you did promote TelexFree via YouTube videos?
A. Yes, I did.
Q. And this also included communications with TelexFree, so that’s not promotion.
Q. Did you keep any of that, like emails?
Q. Why not?
A. I have no use for them.
Q. Okay. So at what point did you get rid of communications with TelexFree or people who were involved with TelexFree?
A. Well, I don’t know exactly when, but when I read the complaint and when it basically told me I shouldn’t be promoting it, then there was no reason for me to keep anything.
Q. Okay. So when you say “the complaint,” are you talking about the complaint or are you talking about the order of the Court?
A. I don’t know. Some document.
At this point the SEC placed in front of Sloan a copy of her TelexFree preliminary injunction.
Q. I’m placing in front of the witness what has been marked as Exhibit 113. Is that the document you were referring to that you read?
A. I don’t know. I have to read it and see. I don’t see anything in reference to it in here.
Q. Can I take that document back from you for a minute?
A. Yes. Maybe you can find it. I don’t see it anywhere.
Q. So you remember reading something that said you were no longer supposed to promote?
Q. Could you look at Paragraph 5?
MR. GOSSELS: You’re talking Roman 5?
MS. BERNSTEIN: Yes. Roman Numeral 5.
That’s not relevant to what I’m talking about.
I don’t know what this is. It’s talking about — it’s talking about depositing money.
BY MS. BERNSTEIN:
Q. No — could you hand it back to me? So you remembered that you were under order not to promote — that you remember something other than that paragraph that forbid you from promoting and that’s why you destroyed all the documents?
A. I didn’t destroy all of any documents. I got rid of the YouTube videos and the website because I was told to take them down.
Q. Who told you to take them down?
A. It’s in one of the documents coming from the SEC.
I wouldn’t just take them down. I was told to take them down. And I remember being puzzled by it because there was one document that says, “We want documents,” and then there was another one that basically said, “Get rid of them.”
Q. Have you ever seen Paragraph 7 of this document before?
A. I’m quite sure I’ve seen this document. It’s a preliminary injunction.
Q. So did you see Paragraph 7?
A. If I seen the document and it’s in it, probably.
A. But there was something else too. I don’t have that.
Q. Okay. So you say it was in the complaint?
A. I think it was in the complaint. I don’t know.
It was in a Court document or a document from the SEC.
Q. And I don’t want to get — and you determined from reading that document that you should take down YouTube videos, stop promoting and get rid of those — that information?
A. I just deleted it from YouTube. It takes two seconds to delete.
Q. But you didn’t have a copy of any of that information?
Q. You didn’t have a copy of any of those YouTube videos?
Q. You didn’t have copies of any of your communications with people involved with TelexFree?
A. I did have copies, but it’s been so long. Most of the people I talk to is by phone, people who knew me, but I have communications with a lot of people around the world because I was helping them, but no.
Q. You didn’t communicate with — so you communicated by email with people who had questions about TelexFree, right?
Q. And you didn’t keep any of those emails?
A. I probably have some. I have to find them. I probably have some.
Bear in mind Sloan was required to turn over any evidence she held prior to the deposition.
Q. So was that answer to that document request is that you might actually have some things in your possession, custody and control for Question 1?
A. Let me see. I think that the part I was answering was the question was communications with TelexFree, communications with investors and potential investors.
And I didn’t speak with anyone who was investing in TelexFree.
Q. But it was a more general one. Anything basically anything related to TelexFree. Go back to the first page of the 1.
Read the 1. It says, “including but not limited to.”
A. I didn’t invest in TelexFree.
Q. What about promoting?
A. Yeah, promoting.
Q. So emails with other people regarding TelexFree that would have involved promoting would have been responsive to Question 1, right?
A. I guess.
Q. Okay. So do you have any documents that are related to you promoting TelexFree that you have not yet produced?
A. I will have to look and see.
Q. I also want to reference Request No. 3 in that 7 exhibit.
And that exhibit is Exhibit 112 that we were just looking at, your response to document request.
Q. Request No. 3 asks for all communications with other TelexFree promoters.
Q. And you said you had no such documents. Is that accurate?
A. It would be on the same line with the first one.
Q. Because, in other words, if you had emails with Randy Crosby or San, those would be responsive to Request No. 1?
A. I never talked to San. I’m going to search and look and see what I have.
Q. Okay. Were you aware that San Rodriguez is now living in Portugal?
A. No. He wasn’t a buddy of mine.
Wow, can’t say I knew that either.
A common theme throughout Sloan’s deposition is tax evasion.
Q. So was it your habit during the — from like from like 2010ish onwards not to file tax returns?
A. I know I filed some taxes. I just don’t know what years. I know I filed some taxes.
I just don’t know where they are, how to get them. I guess I can get them from the IRS.
According to information submitted to the SEC, Sloan claims the IRS is holding her liable for $1,062,737.42.
Q. So let’s talk about your liabilities, which as your attorney points it out, significantly outweighs your assets.
That’s a pretty precise tax number and it says $1,062,737.42. What does that number represent?
A. That’s the number they have on the document that they gave me.
Q. Is that going to be reflected in that stack over there somewhere?
A. I thought I sent that too.
A. I can get that to you.
Q. So they sent you a deficiency letter and they said you owed them that amount of money?
Q. Do you understand that represents taxes —
A. And penalty and interest and all that stuff.
Q. Do you have an understanding what they think — on what income they think you didn’t pay taxes on?
A. 2013 and 2014.
Q. Okay. And what income — where did that income derive from that they think you didn’t pay taxes from?
A. They went into my bank account and they took every deposit and considered it income.
Q. Okay. And they didn’t look at the other side, that money was leaving, as well?
Q. Did you file tax returns in 2013 and 2014?
Q. Why not?
A. Because I was — I just didn’t know what to do. It was just so much stuff going on.
By “stuff”, Sloan of course means she was busy stealing money from TelexFree investors.
Q. If we go down to the third entry, it says an online banking transfer for $440 for Veena, V-e-e-n-a, Parangi, P-a-r-a-n-g-i.
Q. Who is Veena Parangi?
A. She was actually on my team.
Q. And when you say actually on your team, what do you mean?
A. She was in my team. I actually brought in Shah, which is the next entry, Deven Shah, I brought him in and that could have been his wife or his girlfriend or something. I can’t remember. I am not quite sure.
Maybe not. I don’t know, but both of those entries were people who wanted to pay and get into TelexFree, buy some VoIP products and get into TelexFree.
Q. So these are people on your downline?
Q. Going back to Deven Shah and Veena Parangi, once they gave you that money, what happened to it next?
Did you keep it?
A. Yes, I kept it, but it was an exchange. So I had money in my Back Office in TelexFree because they may not have had a credit card so I think you had to have a credit card or something like that.
It was a funny way to do things and then they would sign up for free, right, and then I transferred — it was an internal transfer.
Q. In other words, I’ve heard it sometimes referred to in the Back Office as having points.
A. They weren’t points to me. It was money.
Q. So — but there was money that you could transfer that you had earned from TelexFree?
Q. And you could transfer it to somebody else?
A. To anyone I wanted to.
Q. To make them a member?
Q. Okay. So you would keep the money and then you would transfer in the Back Office the money to buy their membership?
A. Yes. So that nullifies and you zero out.
That’s why it’s difficult to do my taxes. A nightmare.
For the purpose of taxes Sloan claims she’s currently unemployed. She states she’s receiving $1500 in gifts each month from her live-in parents.
But then a few questions later…
Q. Okay. Now, going to Page 8, it says other information. It says, “List any disbursements having a value of $1,000 or more made on your behalf or on behalf of your spouse or child by any other person since April 2011.”
It’s blank. Does that mean there aren’t any?
A. I don’t even know what that means.
Q. It means if one on your behalf paid for something I think is the best way to describe it.
A. Somebody is paying for things for me?
So uh, $1500 a month from her family and yet nobody is “paying for things”?
Totally no contradiction there.
Oh and regarding transfers of $1000 or more by Sloan since 2011, this delightful exchange;
Q. B says, “List all transfers of cash in the amount of $1,000 or more or assets of property or more that you’ve made.”
So that’s you transferring out more than $1,000 at any point in one shot since April of 2011. And that’s also blank.
Are there any?
Q. Okay. Are they going to be reflected in the bank statements that we’re going to go through?
Q. Okay. So it’s fair to say that this — there is a pretty detailed lot of answer to 3-B.
Would it be fair to say the easiest thing to do would be to look at your bank statements to figure out what your answers are?
A. And I sent my Allied Bank statements for the last two years. I don’t know if you have that. I sent it last night.
Q. I don’t have them from last night.
Q. I have some I will — I will let you know I only have some hit or miss.
Q. Okay. Going —
MR. GOSSELS: Let me stop you for a minute. I believe you sent them to me.
THE WITNESS: Yes.
MR. GOSSELS: Did you send them to the SEC attorney?
THE WITNESS: No. I have no communications.
MR. GOSSELS: So I can send them to you.
MS. BERNSTEIN: So I’m missing them, that’s what we concluded.
MR. GOSSELS: I have them and I can forward them to you.
MS. BERNSTEIN: Okay.
MR. GOSSELS: When would you like me to do that?
MS. BERNSTEIN: As soon as possible. But let’s see if we can get through this deposition first.
After a lunch break, the deposition starts to cover TelexFree specifically – beginning with some good ‘ol pseudo-compliance.
Q. And it says one thing you could do was buy an AdCentral, which is $339 for a one-year contract and you would get 10 monthly pages of the VoIP service at the outset and were required to place one internet ad per day.
For each week they placed all the ads, they received one more VoIP package. Investors who posted the ads were promised $20 per week or $1,040 for the year.
Is that how that worked, that AdCentral package?
A. Yes, I think so.
Q. So that’s accurate, Paragraph 30(a)?
Q. So was that a yes, that Paragraph 30(a) of the complaint is accurate, it’s correct?
A. Let’s see. I think so. I’m not sure about the VoIP package. I definitely wouldn’t call us investors.
Q. Besides for the word “investors,” would it be fair to say instead of investors, members?
Q. Would that be a better word?
Sloan seems to fail to realize that keeping up the charade doesn’t mean much at this point.
The SEC has already proven in court that TelexFree was a fraudulent investment scheme.
But anyway alright, members who invest… sure. It’s not like that had any impact on the SEC’s questioning.
Specifically in getting Sloan to admit TelexFree had a pyramid component;
Q. Okay. And when I see TradeMotion payroll, there’s two entries there.
There’s the top entry and there’s one that’s about the fourth entry.
Q. You were working for TradeMotion at that point?
Q. And then there’s a — it’s TelexFree Inc., there’s a description of a payment, so money to you of $290.
What is that?
A. It could be commissions. That was the only reason why they were paying me.
Q. Okay. And how would you — and you said commissions.
Q. So how would you — can we actually — if we could go back to complaint — excuse me. If we could go to Exhibit 116, which is the complaint, and we’ll go look at the next paragraph, and it says “Incentives for investors,” and I know it says investors so we’re going to change that with members.
Q. Okay. And it says that there is several bonus plans for investors who recruit new investors.
Now, looking at A, it says, “$20 for new AdCentral investor and $100 for each new AdCentral Family investor.
Q. Is that accurate?
Q. Okay. And you know that from your personal knowledge of being involved with TelexFree, right?
Q. And then — now we’re still on Page 11.
Now we’re looking at Subparagraph B.
It says $20 for each investor, and actually it changed here to member, so that’s better, and each member’s network up to a maximum 440, as long as the member had recruited two members.
Q. Was that accurate?
A. I think so. Yeah.
Q. So you could make money from recruiting new members?
A. No. That’s the problem with the statement.
It’s saying that we’re getting paid for recruiting people when, in essence, they’re purchasing VoIP product services.
Q. Well, so you’re saying you’re getting a commission off the new member’s purchase of the VoIP service?
A. Yes. That’s what they had. That was their first product.
The old “buy we have a product!” chestnut.
Amusingly, Sloan doesn’t seem aware this exact same argument worked for neither Herbalife and Vemma when the FTC went after them.
The SEC are though, and later pressed Sloan on her non-existent VOIP retail sales.
Q. Well, let me ask that question about you.
How many VOIP services that you sold that were just the 49.99 that weren’t tied to a membership?
A. I don’t know what you mean by wasn’t tied to a membership.
Q. Well, I mean, we talked previously at your prior deposition about the ad central and the ad central family, and those were
6 memberships, correct?
A. Yes. I remember now, yeah. It has been so long ago.
Q. Yeah. So those are memberships?
Q. Right. And then there is just the 49.99 which is you just want to go out and buy the VOIP services.
You don’t want the membership stuff. You don’t want to get involved in all of this. You just want the VOIP?
Q. So my question to you is: How often, you know, how many times did you sell the 49.99 VOIP, you know, just the VOIP without the membership?
A. I can’t remember. I can’t remember.
Q. Was it a lot or a little?
A. I don’t know your definition of a lot or a little. But plain and simple, I can’t remember the compensation plan.
Number two, I definitely don’t remember the numbers. And I don’t recall there being some real itemized-type report that talked about this. I just don’t remember.
I suppose it is a bit hard to remember what never happened.
In a related line of questioning, things got pretty interesting when the SEC presented Sloan with an exhibit of her own website;
Q. I’ve placed in front of the witness what has been marked as Exhibit 129.
It is TelexFree global team in the left-hand corner. And in big blue letters, it says, world class and industry standard products.
Discover a company that pays everyone that participates.
Can’t Sponsor? Can’t sell? No worries. You get paid.
Is this document one of the documents that would have been available on your website for information for people to look at who were interested?
Q. In purchasing memberships in TelexFree?
A. I don’t know whether they want to purchase memberships, but it was definitely there as part of my blog.
Q. What’s your understanding of the part can’t sell? No worries. You get paid. What does that mean?
A. Because it was a multifaceted compensation plan. Part of the compensation plan was that everyone was required to also place ads, a certain amount a day to get a certain amount of money depending upon the plan, whether it was an ad central, whatever that thing was called.
You probably have that information. You probably know more about TelexFree than I do.
Q. So you’re saying that if you could — let me just summarize — that you could make money by placing ads instead of selling the
A. I’m not quite sure of that, though. I would need to look at that compensation plan. I have to look at that. Yeah.
Q. Okay. And you don’t have an understanding in March, they changed that so now you had to sell the product but before, you could just put in ads?
A. I would have to look at both of those compensation plans to make that statement. I don’t know.
Q. But the statement that you put out on your website was that you don’t have to sell the product to get paid, right?
A. Let me see. It says the company that pays everyone that participate. Can’t sponsor? Can’t sell? No worries. You get paid.
Q. So you said that?
A. I wrote that.
Through detailed answers and record cross checking, Sloan confirmed she made backoffice payments and fund transfers to and/or from
- Scott Miller
- Catherine Feehely
- Rex Guynn
- Radislav Geller
- Agodichinma Onyeagba
- Darcy Allen
- Adam Zahra
- Frances Gennetti
- Jill Spoelma
- Joseph Higgins
- Andrea Loza
- Japhet Manywa
- Benas Norkus
- Ahmed Muhammad
- Eannie Pedrick
- Robert Veale
- Catherine Adams
- Rubin Orr
- Murali Mohan Menta
- Krystian Gleniec
- Chiazo Uketui
- Teva Atger
- Sadayoshi Tanahashi
- Monowara Khan
- Sylvain Chau
- Khov Meng
- Rodney Bryant
- Hammed Adekunle Salaudeen
- Masong Usman
- Marina Gomes
- Emanuel Thomas
- Maire Ghislaine
- Dwayne Jones
- Luc Bronstein
- David Torteller
- Richard Needham
- Donna Antoine
- Theresa Anne Gelvin
- Fred Henderson
- Keena Blair
- Thalvabalan Balasundar
- Kathleen Hole
- Michel Sommers
- Jean Bernard Wui
- Victoria Abu, Jacek Paciorek
- Douglas Ewers
- Olivier Chimpiringa
- Della Robbins
- James D. Mosley
- Stephanie Allison
- Slawomir Struzik
- Sayma Amin
- Eric Vons
- Wyrozumska Karolina
- Evelin Encarnacion
- Dorothy Peterkin
- Tue Vang
- Xiong Tzei
- James Randall Brown
- Oliver Lazares
- Thea Sochet
- Zhang Zhensheng
- Robert Bruce Kyomba
- Stevenson P. Simplice
- Esther Kalungi
- Ronald Mukasa Mutebi and
- Kimera Hamzah
Jay Osuna, Daniel Balbinot, Danang Xiong, Michael Daniel, are separately identified as individuals Sloan had “interactions” with through TelexFree.
Here’s an example of how the hundreds of thousands these transfers are made up of occurred and why;
Q. Okay. Do you have an understanding why you’re transferring a hundred bucks to him — excuse me $1,000 to him?
A. I’m thinking these are people who wanted to get some money from my TelexFree Back Office or something because I had money back there, TelexFree, so they can get in or get a friend in or something of the sort.
So since I had it, it was convenient.
Q. This is actual cash, this isn’t Back Office money?
A. Yes. They would give me the cash, I would give them the cash from my Back Office.
Q. So they were buying the cash from the Back Office from you?
For those unclear on what’s being discussed above, these are the monopoly money transfers the occurred within TelexFree.
Basically top investors like Sloan had monopoly money balances in their backoffice, which they dumped onto their downlines in exchange for real money.
Q. By the way, by this point in May of 2013, you seem to have a lot of money in your Back Office.
Q. How did you generate that much money in your Back Office that you could sell that money to others?
A. It was the business model. The business model.
If you have a team, just like with Avon and just like Amway, just like Melaleuca, if you have a team and you’re leveraging off them and they’re working hard and they’re building a team as well and because they had a binary part of their compensation plan, as we saw here, and they also had what we call a uni-level where you can get paid I think it’s like 10 cents from a lot of people, which I kind of scoffed at, but you can make a lot of money on 10 cents. That’s what Warren Buffet said too.
Records reveal that one month Sloan took in $108,000 in deposits.
Not sure if the SEC was going for a money laundering angle, but sounds like Sloan gave them the answers they were looking for.
But while Sloan’s deposition was mostly about her stealing from others, at one point she claimed to be the victim of theft herself.
Q. I’m just noticing, if we go to 5/29, an ATM and debit card transactions, that there is a CheckCard for the San Ignacio Resort?
A. I believe that’s Belize.
Q. Why were you in Belize in it looks the end of May, beginning of June?
A. The first time I went to Belize, it was actually to purchase some property from a colleague of mine. And I never got the property. They stole it. So great luck.
Q. So this colleague, was this a TelexFree colleague?
A. No. No. No. They are bad people.
Q. Did you go to Belize any other times other than that time to purchase property?
A. Yes. I don’t know whether this was trying to purchase it from the guy I didn’t get the property from, but there was another time I did go, I have the documentation here with me, I went out there.
My — I went out there with my mother. I travel with her often. And we put down $50,000, I’ve got the documentation, on a development land.
So we put it down and we were going to have a place built on it and all these other great things.
And when TelexFree folded, I think I had to pay from $3,000 to $5,000 a month, and I did it for probably about five months and I just couldn’t afford it so that was the end of that.
So no property, lost $50,000 there and plus the $3,000 or $5,000 per month for about five 20 months, and that was Sanctuary Belize.
Sloan claims to have lost another $5000 in a bungled property purchase from Peter Redekop.
Q. Okay. Let’s move on to Page 40 in this document. And there is a — now we’re going down to 8/1, “Other Subtractions.”
There is a $5,000 subtraction to a wire for a Peter Redekop.
Q. Who is that?
A. He is the nephew of — what’s his name, Gerard who lived in Canada and that’s that property I was going to buy and it was a really, really inexpensive piece of property out in the boondocks somewhere, and so I gave them that down payment and I kept trying to find the agreement, the deed agreement they gave me, but it went bust and he blames it on the government being corrupt or something.
Not all real-estate deals went badly for Sloan though.
The Illinois house she currently lives in with her parents was purchased for $128,000 in early 2014.
The house was purchased through a Trust Fund, of which a third-party is the trustee and Sloan the initial beneficiary.
After the SEC filed a lawsuit against her, Sloan transferred the Trust Fund to her mother.
Through her mother and again seemingly in violation of the injunction, Sloan took out a mortgage on the house in 2016.
Q. Did you subsequently — did your mother subsequently get a mortgage on this house?
Q. And that was in 2016, correct?
Q. Okay. And at the time were you aware that at the time that she sought this mortgage, that the court had issued a lis pendens against that house in this case?
A. Yes, lis pendens is kind of like a warning or lien, if you will, pending. So it was up to the mortgage company, I believe, to make that decision on whether they would give my mother that loan, and they chose to do so.
Q. Did you understand that the position of the court in this case was that that house was frozen?
A. No, I was not.
Q. At that point? What was your understanding of what the lis pendens issued by the court in this case meant?
A. I always thought a lis pending was like a lien against a home.
And this one, because it is pending, I figure it was a pending lien based upon the outcome of this court case.
Q. Okay. Did you have an understanding that the house was frozen by the court as an asset according to the preliminary injunction?
A. No. I don’t understand what you mean by frozen because it was under a trust.
Q. Understood. But that the asset couldn’t be transferred or dissipated? Did you understand that?
A. The asset was under a trust.
Q. Right. By getting a mortgage, the equity in the house has been reduced, correct?
A. Yes. But I didn’t get a mortgage.
Q. I understand that your mother got a mortgage?
A. Yes, she did.
Q. Okay. But that mortgage has the effect of reducing the value of that house, correct?
A. Yes. The house that she has the assignment of the beneficial interest.
Q. Okay. Did you have an understanding that at the time that she obtained that mortgage, that that house was, that asset, that beneficial interest was not to be dissipated or reduced?
A. No, because the house was under a trust.
Q. And so what makes the difference that it is under a trust?
A. You know I’m not a lawyer and I don’t understand everything.
I figure if it is under a trust, then it’s — I mean, I received the temporary restraining order — well, through my mother.
I was never served, but that’s a whole other issue.
I received a temporary restraining order on any assets that I may have in my possession. But being that this was a trust, I figure it was an asset that wasn’t under my possession.
And I believe what you’re trying to tell me is I was wrong in that regards.
Q. You just testified that your mother received a copy of the temporary restraining order?
A. No, she didn’t receive a copy of it. She was served.
I was served at my mother’s house. I wasn’t living at 14409 Ingleside.
My mother was served and she took the document. So I found out about the document later. I was never served that document.
Buy a house, house gets frozen as part of an asset freeze, transfer house to mom, get a mortgage on house… play dumb when asked about it. No worries!
The amounts Sloan took in increased over time, such that in mid 2013 she felt the need to open up a new bank account.
Q. Could you — Ms. Sloan, could you identify this document for the record?
A. It’s an Old National Bank checking account, I believe, checking or savings. I see checks. Checking account, yes.
Q. And the first page it shows that it was opened on July 18, 2013.
A. Yes, it does.
Q. Okay. So you’ve had this Bank of America account we looked at exhaustively for a while.
So why did you feel the need to open another account?
A. I think that, if I’m not mistaken, there was an Old National Bank — I think it was an Old National Bank was bought out by Bank of America. I think that’s what happened.
Q. But this account was actually opened —
A. Was that opened first?
Q. This account was opened in the middle of the Bank of America account.
In other words, you had the Bank of America account before.
A. Did I?
Q. Yes. And then during the time you had this account.
A. I don’t know. I don’t know why I opened another one. I haven’t the slightest idea.
Sloan appears to have exclusively used the account to launder TelexFree funds through.
Between April 9th and 15th Sloan withdrew $44,000 out of the account.
Three days later the SEC filed a lawsuit against TelexFree and shut it down.
As part of the asset freeze placed upon her, Sloan was prohibited from opening bank accounts without authorization.
Naturally that didn’t stop her…
Q. Could you identify that document that I have just marked as Exhibit 125?
A. It says Wells Fargo account number, and then it has my name on it and it looks like a transaction.
Q. What does that — what does that document reflect?
A. It appears to reflect the bank account.
Q. And is this the bank statements for the bank account that you opened subsequent to the asset freeze in April of 2014?
A. Yes. And you were aware of that because we talked about it.
Q. Right. So this is the —
A. It was after.
Q. Right. And this was the account that you were authorized to open by the court, correct?
A. No. I was authorized to open an Ally Bank account.
Q. Well, actually —
Q. I put the order in front of you.
A. Yeah. Maybe.
Q. You were authorized to open this account?
A. Okay. I will take your word for it.
Q. That’s actually my next question. At some point you opened up an Ally account and the Wells Fargo account closed. Why is that?
A. Because Wells Fargo is about 45 minutes away from me.
In order to do a deposit, every time, I have to drive 45 minutes.
Q. Okay. Did you seek authorization from the court to open the Ally account?
A. No, I did not.
Q. Did you provide any notification to the Commission that you had changed accounts?
A. No, I did not. But I did provide you multiple statements at your request.
Q. When did you provide the Ally statements which are the statements I think you’re referencing?
A. When you asked for them. I can’t remember when.
Q. You’re under a court order to provide statements monthly. I didn’t need to ask for them.
So when did you provide the statements?
A. I can’t remember.
In an attempt to respond to our early 2014 coverage of TelexFree being reportedly under US investigation, Sloan began publishing TelexFree news and updates on her website.
Q. Now, for example here, you say in the bottom of the first page,
why are you asking me for my opinion? Seriously. TelexFree investigated by the U.S. Government, IRS or XYZ. Where’s the beef?
Q. And okay.
A. The question is: Where are the facts.
I didn’t have any facts. Yeah. That’s what the question was about.
Q. Well, were you suggesting that those things were inaccurate as of January of 20 —
A. No. I’m the type of person, if I write something in the blog article that says that ABC is being investigated, I’m going to provide some judicial documents or point them to a legal something that proves that.
But if people go around saying this company is being investigated but they’re not providing any reference material, then to mention it is hogwash until the reference material comes to fruition.
If indeed it is true, right, and I know I heard it later on. You guys have been looking at these guys for more than a year.
I wasn’t aware of that. There was no facts according to that.
There was a bunch of people talking in social media or the blogs. So that’s my question.
So people were coming to me asking me what do you know about this. What do you know about this. I heard they’re being investigated.
I said show me the beef. Where’s the beef? Because I knew absolutely nothing in January 10 2014 about TelexFree being investigated by the United States, SEC or the government or the IRS or XYZ.
The questioning then switches to TelexFree Brazil (Ympactus), specifically Sloan’s website updates regarding the Brazilian TelexFree court case.
Q. Okay. So — but you provided information to people regarding the Brazilian entity?
Q. What did you do to ascertain whether that information was correct?
A. The source from this was a caller. So that means it was a Brazilian source and then there was a Spanish translation.
If I can understand what it means, I probably can respond to your question.
Let me go back to the English. If I can remember. TelexFree Brazil Ympactus to court case.
Okay. News about TelexFree law firms. Okay. Included in these are to defend the interest of TelexFree and Ponzi injunction.
They blocked the company from — the allegations contribute results. To reverse the burden of proof, the prosecutors had just suffered another humiliating defeat.
Uniquely, the wording of access — blah, blah, blah.
I believe Sloan is citing some random caller on a TelexFree webinar as her source.
Other sources Sloan used were “a huge Brazilian team”;
Q. So is it fair to say, then on the next page, which says, English version. See below for Spanish version.
Q. That this is information that you obtained from TelexFree that you put on your blog regarding the Brazilian litigation?
A. No, I didn’t receive it from TelexFree.
There was a huge Brazilian team and some, you know, top, quote-unquote, leaders.
And when asked about another article, Sloan admitted her primary source was TelexFree investors in Brazil.
Q. Does this blog entry reference an actual language in the court decision or a Brazilian newspaper?
A. Let me see. Today, Thursday, November 14th, in the afternoon, there was a conciliation hearing where both parties, Ympactus Company TelexFree and the Public Ministry of Akira is the city in Brazil stating —
Q. I’m just asking —
A. I’m trying to figure out what it is first.
I have to figure out what I wrote before I can tell you where it comes from because it could be in this article. So I’ve got to read it. Is that fair?
A. Okay. For — make an agreement in order to put — let me — I’m a mutterer so you won’t have to write this.
I do see some notes from Carlos Costa.
So when people report on things and they quote it, that means they’ve got the quote from somewhere.
Okay. He was the marketing director. Okay.
Actually, this — in particular, this, I’m reading the English version, this is not a news piece, actually, and this is not about the court case.
It is actually a blog piece, you know. So your question was legitimate when you asked me how do I know.
The only thing I can say is the quotes are, but they could be taken 12 out of context.
Q. Well, you understand that Carlos Costa is associated with TelexFree so he’s not necessarily unbiased, correct?
A. Well, no. Carlos didn’t write this. Someone is quoting Carlos in this.
A. Of course, of course.
Q. But the whole spin-off of this is everything is fine, right?
A. Not really. They talked about some of the issues that could arise.
But yeah, generally, it is — has a positive twist to it, yes. You’re right.
Sloan’s admission that she was publishing unverified information that was intentionally twisted is important – because that’s exactly what she claims BehindMLM was doing at the time.
(Note that we’re incorrectly referred to as “Beyond MLM” in the following line of questioning.)
The other source of the news were those blogs that you liked, which I can’t take them for face value because they never had any facts associated with anything.
They would take what they read and they would spin it.
So I would go directly to these guys and copy and paste this because no way in high heck I know why they write this.
Q. Now, I think you were referring to the blog Beyond MLM is the ones that never have any fact?
A. Yeah, Beyond MLM.
Q. Is that what you were referring to?
A. I don’t mention their name because I don’t like to give them free promotion.
Q. Okay. So — but you need to answer my question. When you’re referring to a blog with no facts, you’re referring to Beyond MLM?
A. There is actually multiple sites out there and that is one of them, yes.
Q. But this site you thought had facts as opposed to Beyond MLM?
A. This is my site and any information.
Q. You took this information from another site, correct?
A. Yes, from a site where there were Brazilians who were privy to the news that were coming out of Brazil. So they had direct access to the information coming out of Brazil.
Those other bloggers did not have direct access.
While BehindMLM was careful to report factual information we were able to verify with news reports and court filings, Sloan, by her own admission, was simply spinning what Brazilian TelexFree scammers told her.
Here’s another example;
Q. Is the information in paragraph 104(d) accurate?
A. Place ads on a weekly — cash will build a team and earn much more.
Yes. Now TelexFree is created millions in Brazil in just 15 months.
That is hearsay. But there is a lot of folks who said they were millionaires from Brazil so I put that in there.
When asked how she knew her sources were accurate, Sloan dodged the question.
Whereas in this instance she launched into a tirade about 100% accuracy, copious questions were met with “I don’t know”.
When queried about her trip to Dubai for Dubli, Sloan put on the following show:
Q. Let me place in front of the witness 18 what will be marked as Exhibit 138. The file should be Holiday Inn Dubai.
A. Oh, Dubai. That definitely wasn’t TelexFree.
That was another company who was trying to recruit me.
I remember that. I loved Dubai. They paid for it, so I went.
Q. What does this trip to Dubai relate to in September of 2014?
A. Oh, gosh. What’s the name of that company? There was a company called — I forgot.
There was a company — they had been around for years and years and years — and they wanted me to come to these events.
They paid me. They wanted me to come on board. And when I got there — I remember when I got there, my friend and I we were listening to them.
And we said, does this sound like anything you want to take back to America? And I said no, let’s go to the mall.
So we went to the biggest mall in the world. We spend four to five hours in there. That’s what that trip was about. Sorry about that.
Q. So what company was this that paid for this trip?
A. No. Actually, the company didn’t pay for the trip. A colleague of mine paid for the trip because he wanted me on his team.
What was the name of that company? I can’t remember, but I’m quite sure I can find it.
Yeah. I can’t remember because I decided not to do it anyway.
Q. What is the name of the colleague who gave you — because presumably, there was also airfare, as well as hotel in Dubai?
Q. So who paid for that?
A. Who introduced me? Let me see. I think it was a friend of mine named Glenn, who actually convinced someone else, probably part of the company.
I can’t remember the name of the company, though. And they paid for the airfare.
Yeah. That’s all I know. I don’t remember. I don’t remember the name of the company. I have to look that up.
Q. Does Glenn have a last name?
A. Yes, he does.
Q. What is his last name?
A. Smith. Glenn Smith. That was quite some time ago.
Q. You flew to — so you flew to Dubai from Chicago, right?
Q. What airline?
A. Whatever they booked me on. There is only two major airlines, Midway or O’Hare.
Most likely it is O’Hare because — pardon?
Q. I’m not asking about airports. It was clearly international, so it was O’Hare.
A. Oh, I don’t know.
Q. I’m asking about airlines.
A. I have not the slightest idea. I’m serious. I don’t remember. There is like a blip in my brain. I don’t know anything. I can’t remember.
The blip seems to be momentary, as a few moments later Sloan did remember the company name.
A. Oh, Dubli. Dubli. D, as in Dave, U, B, as in boy, L, as in Larry, That’s the name of the company.
Dubli. It is so funny. It almost sounds like Dubai. You can look that up.
The deposition ends with Sloan’s lawyer giving her the opportunity to talk about complaints she had with TelexFree’s customer service, VOIP product not working and planned products.
As for those Sloan personally recruited into TelexFree who lost money, the picture painted is one of bleak isolation;
Q. Okay. And how did you hear about it online?
A. People. Talk.
Q. Friends of yours? Acquaintances?
16 A. I don’t have any friends online. You don’t know those people. Just people you hang out with online.
I suppose if you’ve been fleecing people for as long as Sloan has, detachment from your victims becomes second nature.
On November 20th the SEC filed a motion requesting partial summary judgment against Sloan.
If granted, Sloan will be up for $1,271,215 in disgorgement on top of a to be determined civil fine.