Two major MLM Ponzi scammers to be sentenced in February
If you’ve been paying any attention to the rumblings of the MLM underbelly, hours after Donald Trump is sworn in on January 20th Ponzi and pyramid schemes will be declared legal and a new golden era of scamming will be upon us.
Until then, February is shaping up to be quite the win for US regulatory and law enforcement agencies.
James Merrill, co-founder of the $3 billion TelexFree Ponzi scheme, is up for sentencing on February 2nd.
Merrill (right) plead guilty to wire fraud last October and is facing up to ten years in prison.
Paul Burks founded and ran the $850 million dollar Zeek Rewards Ponzi scheme. Burks fought criminal charges against him to the bitter end, eventually losing in court via a unanimous guilty verdict last July.
In a court filing on Friday, Burks’ sentencing has been tentatively scheduled for February 13th. It is my understanding Burks is probably going to spend the rest of his natural life behind bars.
The sentencing of Burks and Merrill will be major landmarks in the respective TelexFree and Zeek Rewards criminal cases.
Burks’ sentencing will mark the end of a criminal investigation that began sometime in late 2011 or early 2012.
I myself am also looking forward to moving on, having penned 184 articles on Zeek Rewards since 2011.
Merrill’s sentencing isn’t the end of TelexFree litigation but a significant milestone nonetheless.
Merrill’s co-conspirator Carlos Wanzeler remains a fugitive in his native Brazil. An ongoing investigation by authorities recently saw $20 million of Wanzeler’s assets seized in Massachusetts.
Wanzeler had hoped to launder the funds out of the US to Brazil via Hong Kong.
Assets purchased with TelexFree funds and gifted to Wanzeler’s relatives in the US are also being recovered.
Through ongoing cooperation with authorities, it is expected Wanzeler will eventually face criminal trial either in Brazil or the US.
Till then, stay tuned for Merrill’s sentencing on February 2nd and Burks’ on the 13th.
Update 2nd February 2017 – James Merrill’s sentencing has been delayed until March 2nd.
Update February 14th 2017 – Following a lengthy sentencing hearing, Paul Burks has been sentenced to fourteen years and eight months in prison.
Update 16th February 2016 – At the behest of Merrill’s attorney, his sentencing has been postponed again until March 22nd.
In term of dollar amount and number of victims, can you compare Zeek Rewards, TelexFree, with USFIA? Will we see the criminal charge against Steve Chen pretty soon?
I would think the SEC has a smart stratergy; settle the civil case so that the defendent would not be able to appeal, which might tie up the case in court for years, and then clear up ways for criminal case.
when you commit fault with intend, as the summary judgement states, it is of criminal nature!
That’s entirely on the DOJ, who don’t comment on open investigations.
Oz, I have two questions regarding Steve Chen.
First: he has now agreed to disgorge his ill-gotten gains. Based on what you know from previous Ponzi cases, when the perpetrators make this kind of agreement do they usually follow through on what they promise?
Second: Presumably Chen agreed to this in hopes he can avoid a lengthy prison sentence if he is prosecuted criminally, or maybe even avoid prosecution altogether.
Again from what you know from past cases, does it seem likely he could avoid prosecution or get a very light sentence?
They have to or the SEC pursues the matter in court.
SEC cases don’t have anything to do with criminal cases brought by the DOJ.
Why telex man get off lightly but you figure the scammer who got 2B less will be in for life?
Merrill appears to have been Wanzeler’s Dawn Wright-Olivares.
He’ll go to jail but if he’s cooperated with authorities and continues to cooperate to bring Wanzeler down, I don’t see him getting a heavy sentence.
Burks won’t receive a life sentence but he’s old and overweight. Anything more than five years will see him spend the rest of his natural life in jail IMO.
For reference, Wright-Olivares received a seven and a half year prison sentence.
Update: Merrill’s sentencing has again been delayed until March 22nd.