The first checks for compensation in the $1 billion global Ponzi scam involving TelexFree Inc. have gone out to over 14,000 investors in Massachusetts. Victims received $2.9 million in total as part of a settlement with Fidelity Cooperative Bank. This is only a small portion of the alleged losses.
About 1.9 million investors are still waiting to get any financial relief in the case, which affected not just people in the US as the scam spread globally and virally online and by word of mouth. The alleged Ponzi scam involved fraudsters selling inexpensive Internet phone service for long distance calls. They were recruited as members for $1,400 increments. Big financial returns were promised to investors for bringing in other investors and using Internet ads to market the business. While early investors made money, many others suffered substantial losses.
Telex-Free was shut down in Brazil in 2013, but the Ponzi operation continued in Massachusetts where it was headed up by James Merrill and Carlos Wanzeler. Both deny the criminal and civil charges.
Wanzeler ran off to Brazil last year where he has managed to avoid U.S. authorities. Merrill is awaiting trial.
Fidelity Cooperative Bank, which was run by Merrill’s brother, was one of a number of banks that held deposits for TelexFree. The bank’s executives claim they had no knowledge of the Ponzi scam. However, they consented to settle allegations that they should have been able to assess what was happening at the time. To date, the trustee in this case has seized $150 million in assets but there will be no distribution of these funds until after the criminal case is concluded.
At Shepherd Smith Edwards and Kantas, LTD LLP, our securities fraud lawyers represent individual investors, including those who have chosen to opt out of class action securities cases. We aim to pursue the recovery of investment losses and other damages resulting from negligence, fraud, and other wrongful actions. Contact us today.
TelexFree fraud victims receive first checks for losses, Boston.com, August 14, 2015
TelexFree, Inc. Case, FBI