Federal investigators caught the chief financial officer, CFO, of TelexFREE trying to leave with nearly $38 million while they raided the company’s Marlborough offices this past Tuesday, court records show.
When Homeland Security Investigations agents searched the bag, they found $37,948,296 in cashier’s checks.
SEC's Charge and Freeze Details Against TelexFree
The SEC, which has charged Telexfree with being a pyramid scheme, currently has a freeze on all of the company’s assets; the commission had $39 million accounted for publicly as of Friday, the bulk of which was the seized cashier's checks. |
| Officials from Homeland Security Investigations (HSI) removing items from TelexFREE in Marlborough on Tuesday (Photo: Wicked Local Canton) |
According to a source familiar with the SEC's case, the commission typically will serve notices to any banks suspected of holding money connected to the company under investigation in a process that can take several days to weeks. The SEC has estimated TelexFREE raised around $300 million over the past two years.
Paul G. Levenson, director of the SEC's Boston regional office, said Craft was not taken into custody on Tuesday. While the Boonville, Ind. resident, as well as Merrill, were among eight company executives and promoters charged by the commission in connection with its civil case against TelexFREE, none of them had yet been criminally charged as of Friday afternoon.
According to the company's bankruptcy filings, TelexFREE claims to have more than 100,000 people to whom it owes money. It targeted Brazilian immigrants in particular, many of whom invested tens of thousands of dollars in the scheme, according to officials at the Brazilian Immigrant Center in Allston.
"I think we haven't seen half the devastation this TelexFREE scam has done to the community," she said, adding she has heard of people selling their cars or even their businesses to raise money to put into the company.
The SEC says the scam worked by getting people to pay to post ads and recruit more investors for the company, which ostensibly sold an Internet-based phone service. Some of those customers, whom TelexFREE called "promoters," saw as much as a 250 percent return on their investment, according to authorities.
You can read the full official report from the SEC describing the events.
Authority's Present Concerns
Natalicia Tracy, the executive director of the Brazilian Immigrant Center in Allston, few days ago issued an official Press Release on recent Telexfree scam events.She said she is concerned about misinformation spreading online that reports the company has been cleared of wrongdoing and will get back into business soon. One Portuguese-language blog, for instance, on Thursday had posted a news article claiming a U.S. court had already denied the SEC's accusations against TelexFREE.
The Brazilian Immigrant Center is also trying to prevent defrauded investors from being duped again by scammers promising to get their money back, Tracy said. On Thursday, the center released a press release urging people to instead report their concerns to the Attorney General's Public Inquiry and Assistance Center.
Tracy said the TelexFREE case has demonstrated "we're going to have to be a lot more vigilant about informing the community" about suspected Ponzi schemes, and that the center will work more closely with the Attorney General's office in the future to keep track of any scams affecting the Brazilian community.
Source(s): Wicked Local Canton; Brazilian Immigrant Center; Securities & Exchange Center
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