There has been a whole bunch of stuff filed in the last 48 hours and, rather than write separate updates for each motion and ruling, I figured it’d be of more use to provide a summary of TelexFree’s current legal status.

Last we checked in the SEC had filed a motion requesting TelexFree’s bankruptcy application be moved to Massachusetts, and the Department of Justice had petitioned for the appointment of a Chapter 11 trustee. If granted, that would put the DoJ in charge of TelexFree’s application and the company itself.

TelexFree also managed to delay the scheduled April 24th preliminary injunction hearing. A new hearing to decide whether a preliminary injunction should be enetered against defendants Joe Craft, Carlos Wanzeler and Jim Merrill has been scheduled for May 7th.

A hearing to decide whether a preliminary injunction should be granted against the remaining defendants (Faith Sloan, Randy Crosby, Santiago De La Rosa, Sann Rodrigues and Steve Labriola), has been scheduled for April 25th.

In the meantime, the temporary restraining order remains in place (currently till the April 25th hearing).

As of the closing of April 24th, here’s where we’re currently at. [Continue reading…]

According to the SEC vs. TelexFree case docket, on the 23rd of April TelexFree filed an emergency motion seeking to delay the hearing for the permanent injunction.

The company sought to set a new date for the hearing on May 5th, with the temporary restraining order to remain in place until then.

The reason cited for the delay is that TelexFree claim they need more time ‘to respond fully to the plaintiff’s request for a preliminary injunction‘.

Riiiiiiight. [Continue reading…]

Reymundo Torres: once the company comes back everybody is going to receive their money.

-snippet of a TelexFree social media discussion, published 6 hours ago

Although it’s sort of died down, one of the more persistent assertions TelexFree affiliates are making is that the company is flush with cash. The picture painted is that TelexFree would easily be able to pay out the $1 billion it accumulated in ROI liabilities.

Contrasting with this rosy vision however, is the reality that continues to be conveniently ignored by many of TelexFree’s affiliate investors. Having filed for bankruptcy just days before, we’ve already covered how TelexFree CFO attempted to flee with $37.9 million in checks as an FBI led raid was executed.

Now, as part of an exhibit of the SEC’s request for a jurisdictional change in the bankruptcy proceedings, comes even more sordid details of management’s last minute cash-grab before the Titanic-like TelexFree ship went under. [Continue reading…]

Just like their “European office” in London, TelexFree’s presence in Nevada constitutes nothing more than a smoke and mirrors cover for the scheme.

Identified by the SEC as being nothing more than a “rent-a-space office in Las Vegas”, TelexFree ‘transacts virtually no business in the state, other than the recruitment of participants in the scheme‘.

And it is now on this primary fact that the SEC are asking the bankruptcy court of Nevada to move TelexFree’s Chapter 11 application to Massachusetts. [Continue reading…]

The Unites States Trustee program is

a component of the Department of Justice responsible for overseeing the administration of bankruptcy cases and private trustees.

Under the party name “US Trustee”, the DoJ has now filed what is the first major opposition to TelexFree’s bankruptcy proceeding. The DoJ’s motion to appoint a “Chapter 11 trustee” addresses the elephant in the room that is as of yet untackled in TelexFree bankrupty proceeding: That being of course the serious allegations laid out against the company by the SEC and Massachusetts Securities Division.

Both agencies have filed complaints against TelexFree, alleging it to be a pyramid and Ponzi scheme respectively.

Supported by damning evidence against the company, here’s a breakdown of the DoJ’s latest filing. [Continue reading…]

Nerium International launched in 2011 and operate in the anti-ageing MLM niche. The company is is based out of the US state of Texas and is headed up by Founder and CEO, Jeff Olson.

Olson’s MLM career appears to have started in the late eighties, with Olson starting out in National Safety Associates (also known as “NSA”) and then Qurom.

A problematic characteristic shared by both these companies appears to be affiliates being required to purchase stock they don’t need and/or can’t sell (front-loading).

According to the Wikipedia entry for NSA;

NSA had some legal troubles in 1993, as the Attorney General’s office followed up on complaints that the company was deceptively requiring new distributors to make large upfront purchases of air and water filters.

Each of the 32,000 distributors in Florida purchased an average of $7,000 worth of water filters, and many of these distributors were unable to sell all of them.

And on Quorom, Rod Cook over at MLM Watchdog writes;

The little hand held alarms at $25 sold like hot cakes (to quote Raymond Hung) but they were easy to copy and sell in discount stores.

Meantime most distributors were looking at that pile of $450 house alarms gathering dust in the garage! They were looking at top dogs making $1-$2 million and saying “I think I have been had!”

Consumer electronic companies never spun off the main item, the house alarm! Period zip zero, just the hand held and “bike” alarms. So quit the B.s.

Now, another unique front end load with a $450 dust collector?

The WatchDog helped people file complaints to get some of the piles of dust collectors out of people’s garages.

NSA are still in business today (although they no longer market water filters), with Quorom filing for bankruptcy in 1996.

In a fluff piece on Olson (right), Marketing Merge credits him with having ‘one of the largest organizations in the history of’ NSA and a ‘gigantic organization’ in Quorum (which is for some reason incorrectly referenced as “Coram” on the site).

In Quorum, Olsen is specifically referred to as

the #1 money earner in the company. He was so successful; he was eventually made the Chief Executive Officer of the company.

After the Quorum bankruptcy Olson then went on to launch The People’s Network, which later merged with Prepaid Legal.

After the merger Olson stayed on as a trainer and consultant for the company, eventually leaving around the time PrePaid Legal was sold to MidOcean Partners (who then changed the company’s name to “Legal Shield”).

I couldn’t find out exactly why Olson left PrePaid legal, but he did so at a time when a whole bunch of top-affiliates also left the company – so I’m assuming it has something to do with the sell off to Mid Ocean.

This was in 2011, with Olson then going on to form a “partnership” with Nerium Biotechnology later that year. That partnership culminated with the launch of Nerium International.

Since then I believe it’s been smooth sailing for the company, with the exception of a lawsuit filed against them by actor Ray Liotta last month.

Around Oct. 13, 2013, Liotta claims in his complaint that as part of a marketing campaign, Nerium, “by and through its agents, distributed photographs and related materials that identify, name, and/or describe, and purport to show [Liotta] ‘before-and-after’ using Nerium AD skin cream.”

In the before photo, Liotta’s skin is blotchy while in the “after” photos his skin appears to be smoother.

Several exhibits in the court filing are photos of the same “before-and-after” photo shared by individuals on social media site Facebook, Twitter, Google+ and Pinterest.

Nerium are claiming ignorance, indicating that this might be a rogue affiliate advertising campaign issue:

In a statement provided to ABCNews.com, a spokeswoman for the company said, “Nerium was surprised to learn through the media about a lawsuit filed by Mr. Ray Liotta.

We take claims against our company seriously and we are committed to investigating this matter promptly.”

In the lawsuit, Liotta claims Nerium is “a product-based pyramid scheme”.

Nerium sells its products to “Nerium Partners,” sales agents who recruit new partners “in an ever-growing pyramid.”

To the best of my knowledge, as at the time of publication the lawsuit remains unresolved.

Read on for a full review of the Nerium International MLM business opportunity. [Continue reading…]

The Dominican Republic is emerging as one of the hardest hit TelexFree investor markets. Yet, despite a significant number of Dominicans investing in TelexFree, local authorities failed to take any action against the company or its top local promoters.

Not because they didn’t know TelexFree was an unsustainable Ponzi scheme mind, but rather because their hands were tied behind their backs due to the shortcomings of Dominican law. [Continue reading…]

You’re at the top of a global billion dollar Ponzi scheme that recently collapsed, and was then shutdown by US regulators.

If you’re Randy Crosby or Santiago De La Rosa, you disappear off into the night and are never heard from again.

If your Faith Sloan, after attempting to brush off the severity of situation as a play-date with regulators, you quietly begin to selectively delete all of the incriminating evidence you’ve uploaded to the internet these past two years.

And if you’re Sann Rodrigues, who is perhaps facing the greatest threat of retribution from those he recruited into the scheme, you first pretend to be a victim of the scam you were a leader in, and then start making all manner of promises to your downline. [Continue reading…]

Yesterday saw the continuation of the first day hearings in TelexFree’s bankruptcy application. Barring any additional information being made public, it looks like the hearing saw three significant events take place:

1. The DoJ have formally objected to KCC’s fees and compensation
2. Some of KCC’s actions have been “troubling” to the Judge presiding over the application
3. A “final hearing” date has been set for May 2nd, with no relief being granted in the interim

As demand for reliable updates on the case surges, below you’ll find my break down of the April 21st bankruptcy hearing and what’s next in the road ahead. [Continue reading…]

In a last-ditch attempt to appease regulator and reduce the impact of the fraudulent activities the company had engaged in over the last two years, TelexFree began filing applications to register itself as a telecommunications provider in US states.

The question of why this was only done now of course lingers, but that’s not the focus of recent developments regarding TelexFree’s applications.

Contracted as a consultant to assist TelexFree to file these applications was Joseph Isaacs, who is ironically widely credited as a catalyst in the demise of the Fortune High-Tech Marketing pyramid scheme.

Isaacs, working through his company ISG Telecom, filed the telecommunication registrations on behalf of TelexFree. As cited on the Washington registration form, the reason TelexFree needed to register with the state is because

All telecommunications companies must register with the Utilities and Transport Commission (UTC) prior to beginning operations in the state of Washington.

To that effect, on the 21st of March an application was filed, requesting permission for TelexFree to provide “long distance interLATA” services in the state of Washington. On the application, Carlos Costa, James Merril and Carlos Wanzeler were cited as officers/directors of TelexFree. Isaacs was listed as a “regulatory contact”.

In a letter addressed to Jim Merrill dated April 16th, Steven King, Executive Director and Secretary of UTC, advised

Effective April 20, 2014, the Utilities and Transportation Commission grants TELEXFREE, LLC registration in Docket UT-140457 as a competitive telecommunications company.

Just one day earlier both the Massachusetts Securities Division and SEC had filed respective Ponzi and pyramid scheme complaints against TelexFree.

Upon learning about the cases, particularly that of the SEC, Isaacs appears to have hit the panic button. He now wants nothing to do with TelexFree’s telecommunications applications – in Washington or anywhere else. [Continue reading…]