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Telexfree

TelexFree Inc.
(prev. Common Cents Communications Inc.)
Company typePrivate
IndustryPonzi scheme, MLM
FoundedFebruary 2, 2012
FounderCarlos Roberto Costa, Carlos Nataniel Wanzeler and James Matthew Merrill
HeadquartersMarlborough, Massachusetts, United States
Area served
Worldwide
Key people
List
    • James Matthew Merrill
    (President)
    • Carlos Roberto Costa
    (Director)
    • Carlos Nataniel Wanzeler
    (Director)
    • Sanderley Rodrigues de Vasconcelos
    (Main Network Leader) (Main Network Leader) (Main Network Leader) (Main Network Leader)
Products99TelexFREE (VoIP service)
Number of employees
7[1][2]
Divisions
Sister companies
WebsiteTelexfree.com

Telexfree (stylized as TelexFREE), a trade name owned by Telexfree Inc., was a multibillion-dollar Ponzi scheme disguised as an internet phone service company. Prosecutors have described it as the largest fraud of all time in terms of the number of people affected - more than 1 million, with victims in various countries.[8][9] The brand became best known for its operations in Brazil held by Ympactus Comercial Ltda after it was involved in an ongoing investigation and trial for operating a Ponzi scheme,[21] and later for having its operations suspended in the US by SEC under the charges of operating a multibillion-dollar Ponzi and pyramid scheme.[31]

Telexfree Inc. owns the rights to the Telexfree brand worldwide. The company was created by Carlos Roberto Costa, Carlos Nataniel Wanzeler and James Matthew Merrill after the change of its former corporate name Common Cents Communications Inc., which was incorporated in Massachusetts.[32] According to the Company Registration Office of Massachusetts, Telexfree Inc. started to use this corporate name on February 15, 2012.

Telexfree Inc. is a sister company of many other companies that operates TelexFree Marketing Plan, which belongs to the same founders and also share the same website. It includes a Brazilian company named "Ympactus Comercial Ltda", which was suspended in that country on June 13, 2013, by order of the court of Acre State.[33][34]

Telexfree's Brazilian operations were regarded as one of the largest financial frauds in Brazil's history,[35][36][37] according to Brazil's Ministry of Justice[38] and the Federal Public Ministry.[12] The number of investors (labelled as "promoters" by Telexfree) has not yet been determined; by the end of August 2013, just after companies' suspension, Company Director Carlos Roberto Costa said that the company had 1,049,619 active promoters in Brazil.[39][40] The company fell under investigation by Brazilian authorities in January of 2013, and fell under investigation of the UNITED STATES DISTRICT COURT (DISTRICT OF MASSACHUSETTS) on August 31st, 2022,[41] which led the Court to freeze the company's and its owners' assets in Brazil and maintain, despite numerous appeals, the suspension of its operations in Brazil. Telexfree Brazil (Ympactus Comercial Ltda) denies the accusations, saying that it operates under the multi-level marketing structure, commercializing VoIP services. The final trial and judgement will likely be held in 2014, and the company assets will probably remain frozen before that, according to the Public Ministry (public prosecutor) of Acre State.[42]

Telexfree and BBOM, both companies suspected of operating Ponzi schemes and suspended by the Brazilian government, were featured among the top 10 most searched terms on Google during the year of 2013 in Brazil.[43][44][45]

On April 13, 2014, Telexfree LLC filed a petition for relief under the U.S. bankruptcy code.[46][47]

In April 2014, an investigation in the United States confirmed that Telexfree worked under a Ponzi scheme and handled more than $1 billion worldwide. The conclusion was made by SEC-MA, the agency that regulates the financial transactions in the company's home state of Massachusetts.[30][47][48][49] SEC, in its Federal jurisdiction, also published a complaint against Telexfree INC, Telexfree LLC, the owners James Merrill and Carlos Wanzeler, marketing director Steve Labriola, as well as telexfree promoters Joseph Craft, Sanderley Rodrigues de Vasconcelos, Santiago de la Rosa, Randy N. Crosby and Faith R. Sloan.[22][25][50][51]

  1. ^ Patrick Pretty (April 3, 2014). "Uproar In TelexFree's Billion-Dollar Broom Closet". patrickpretty.com. Retrieved April 5, 2014.
  2. ^ Tennessee Regulatory Authority (March 18, 2014). "Application of TelexFREE LLC for a Certificate of Public Convenience and Necessity" (PDF). tn.gov. p. 37. Retrieved April 5, 2014.
  3. ^ Nevada State - Registration Office (December 6, 2013). "Telexfree LLC Company Registration NEVADA". Nvsos.gov. Archived from the original on September 27, 2013. Retrieved December 2, 2013.
  4. ^ Massachusetts State - Registration Office (December 2, 2013). "Telexfree LLC Company Registration MASSACHUSETTS". Sec.state.ma.us. Archived from the original on December 4, 2013. Retrieved December 2, 2013.
  5. ^ "Telexfree LTD Information". Companycheck UK. Retrieved December 5, 2013.
  6. ^ Canada Government - Corporations (December 5, 2013). "Telexfree Canada Inc. Registration". Ic.gc.ca. Retrieved December 5, 2013.
  7. ^ "Ympactus Comercial Public Registration Company Record" (PDF) (in Portuguese). Receita Federal. Archived from the original (PDF) on December 17, 2013. Retrieved December 5, 2013.
  8. ^ a b Heller, Matthew (October 25, 2016). "TelexFree Founder Pleads Guilty to Massive Scam -". CFO. Retrieved November 1, 2016.
  9. ^ a b Corrigan, Tom (October 24, 2016). "TelexFree Founder James Merrill Pleads Guilty to Fraud Charges". Wall Street Journal. ISSN 0099-9660. OCLC 1298767192. Retrieved November 1, 2016.
  10. ^ "Telexfree é condenada a pagar R$ 3 mi por danos morais coletivos". Acre (in Brazilian Portuguese). September 16, 2015. Retrieved November 1, 2016.
  11. ^ "TelexFree under criminal investigation in Brazil". Behind MLM. Retrieved December 6, 2013.
  12. ^ a b "Understanding the Telexfree Case" (in Portuguese). G1 News Portal. March 18, 2013. Retrieved December 6, 2013.
  13. ^ "Telexfree at Fantastico TV Show" (in Portuguese). Rede Globo de Televisão.
  14. ^ "Justice Saw Evidences of a Ponzi Scheme in Telexfree" (in Portuguese). G1 News Portal. June 30, 2013. Retrieved December 4, 2013.
  15. ^ "Public Ministry targeting Telexfree Operations" (in Portuguese). SBT Television. Retrieved December 4, 2013.
  16. ^ "Learn how to identify signs of pyramid schemes and not to fall for scams". G1 Globo (in Portuguese). July 7, 2013. Retrieved December 12, 2013.
  17. ^ "Court rules that Telexfree can no longer recruit promoters" (in Portuguese). A Gazeta. Retrieved January 29, 2014.
  18. ^ "Finance Ministry accuses Telexfree for operating a pyramid scheme" (in Portuguese). A Gazeta. Archived from the original on February 25, 2021. Retrieved January 29, 2014.
  19. ^ "Finance Ministry accuses Telexfree for operating a pyramid scheme" (in Portuguese). A Gazeta. Archived from the original on February 25, 2021. Retrieved January 29, 2014.
  20. ^ "Ministry of Justice sues Telexfree for evidence of pyramid scheme". Folha de S Paulo (in Portuguese). Retrieved January 29, 2014.
  21. ^ [10][11][12][13][14][15][16][17][18][19][20]
  22. ^ a b "SEC Charges TelexFree With Fraud, Alleges $1.1 Billion Pyramid Scheme". Forbes. Retrieved April 22, 2014.
  23. ^ "SEC Halts Pyramid Scheme Targeting Dominican and Brazilian Immigrants". US Securities and Exchange Commission. SEC. Retrieved April 22, 2014.
  24. ^ "Feds Raid Mass. Office of TelexFREE in $1 Billion Ponzi Scheme Probe". Boston.com. Retrieved April 22, 2014.
  25. ^ a b "SEC freezes assets of firm, 8 people in fraud probe". The Boston Globe. Retrieved April 22, 2014.
  26. ^ "Telexfree is a Pyramid Scheme and collected US$1 billion worldwide, says the American government". G1 Globo (in Portuguese). Retrieved April 22, 2014.
  27. ^ "Secretary of State charges TelexFREE with fraud". The Metro Daily News. Archived from the original on March 15, 2021. Retrieved April 22, 2014.
  28. ^ "Marlborough firm accused of Ponzi scheme". USA Today. Retrieved April 22, 2014.
  29. ^ "Jury trial demanded against defendants TelexFree, Inc., TelexFree, LLC, et al" (PDF). US Securities and Exchange Commission. Archived from the original (Complaint) on October 5, 2014. Retrieved April 22, 2014.
  30. ^ a b "Massachusetts regulator says phone-service firm runs pyramid scheme". Reuters. Retrieved April 22, 2014.
  31. ^ [8][9][22][23][24][25][26][27][28][29][30]
  32. ^ Massachusetts State - Registration Office (December 2, 2013). "Telexfree INC Company Registration". sec.state.ma.us. Archived from the original on December 4, 2013. Retrieved December 2, 2013.
  33. ^ "Court Suspends Telexfree Operations". Behind MLM. Retrieved December 4, 2013.
  34. ^ "Court Blocks Telexfree Payments and New Participants" (in Portuguese). IG News Portal. Archived from the original on December 3, 2013. Retrieved December 5, 2013.
  35. ^ "Telexfree is defeated and still prevented from making payments and new registrations" (in Portuguese). IG News Portal. Retrieved December 4, 2013.
  36. ^ "Telexfree is seen as the biggest con in the Brazilian history" (in Portuguese). Ariquemes Online Newspaper. March 11, 2013. Retrieved December 4, 2013.
  37. ^ "Telexfree the con of the century" (in Portuguese). Luis Nasiff. March 11, 2013. Retrieved December 3, 2013.
  38. ^ "Public Ministry opens the investigation procedure against Telexfree" (in Portuguese). Valor Econômico Newspaper. June 28, 2013. Retrieved June 28, 2013.
  39. ^ "Telexfree realized several peoples dreams" (PDF) (in Portuguese). A Tribuna Newspaper. Archived from the original (PDF) on February 24, 2021. Retrieved December 10, 2013.
  40. ^ "Telexfree: Public Ministry orients the Telexfree promoters to not prosecute the company in this phase" (in Portuguese). IG News Portal. Archived from the original on December 4, 2013. Retrieved December 4, 2013.
  41. ^ "PDF: CIVIL ACTION NO. 4:14-md-02566-T" (PDF). Government of the State of Massachusetts. Retrieved April 28, 2024.
  42. ^ "Telexfree and BBom court decision only in 2014" (in Portuguese). Veja.abril.com.br. Retrieved September 8, 2013.
  43. ^ "Accused of pyramid are among the most searched on Google in 2013" (in Portuguese). ISTOÉ Dinheiro. Archived from the original on December 20, 2013. Retrieved December 19, 2013.
  44. ^ "Nelson Mandela's name was the most searched term on Google in 2013" (in Portuguese). G1 Globo. December 17, 2013. Retrieved December 19, 2013.
  45. ^ "Google Zeitgeist 2013 reveals what the world searched in the year" (in Portuguese). Exame Abril. December 17, 2013. Retrieved December 19, 2013.
  46. ^ "Petition for relief under Chapter 11 of the United States Bankruptcy Code". Retrieved April 15, 2014.
  47. ^ a b "Galvin charges phone-service company with $90m fraud". The Boston Globe. Retrieved April 15, 2014.
  48. ^ "administrative complaint" (PDF). SEC MA. Retrieved April 22, 2014.
  49. ^ "Investigação nos EUA diz que Telexfree é pirâmide, e alvo eram brasileiros - Notícias - UOL Economia".
  50. ^ "Case 1:14-cv-11858-DJC Document 2 Filed 04/15/14" (PDF). US Securities and Exchange Commission. SEC. Retrieved April 22, 2014.
  51. ^ "SEC Files Charges in Pyramid Scheme Targeting Immigrants -- Update". The Wall Street Journal. Retrieved April 22, 2014.
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