Wednesday, February 24, 2016

TelexFree victims likely to wait months for payments

People who lost money in TelexFree Inc., the alleged $3 billion global Ponzi scheme, will be able to start filing claims online starting April 1. But any payments will take much longer.
In April 2014, Homeland Security investigators raided telecommunications and marketing firm TelexFree in Marlborough.
The trustee in the bankruptcy of the former Marlborough- and Brazil-based company said the system will help handle a vast volume of information. TelexFree is believed to be the largest Ponzi fraud ever in terms of participants, with 1.9 million people in 240 countries.
The claim system will be available in three languages -- English, Spanish, and Portuguese -- and will have online videos to assist claimaints, according to the trustee,Stephen Darr.
But alleged victims will likely have to wait months more for any potential repayments. Federal authorities have seized about $150 million in assets from the former company and its owners. But those funds will not be available until a verdict is reached in the government’s criminal case against them.
Darr also is trying to get more money back for victims. He is suing 15,000 US residents and 78,000 people abroad who reaped profits improperly in TelexFree. In a Ponzi scheme, new participants’ money is used to pay off earlier participants.
The company purported to sell Internet phone service but brought in most of its money from people who purchased “accounts” of $1,400 each, prosecutors have alleged. As investors spread the word to friends and family, the enterprise ballooned in size.
Claimants can seek only the money they put into TelexFree, the court has ruled, not the profits they were promised. Even then, there isn’t nearly enough money to cover all the losses.
The trial is scheduled to start in October. James Merrill of Ashland and Carlos Wanzeler, formerly of Northborough, both face civil and criminal fraud charges in the case. Merrill is out on bail with a GPS monitoring device; Wanzeler has taken refuge in his native Brazil, and US authorities have been negotiating to bring him back for the trial in Massachusetts.
For TelexFree’s alleged victims, it’s been a long wait already. The company filed for bankruptcy protection in April 2014.
A federal judge in January approved the trustee’s recommendation of BMC Group Inc. of Seattle to build the claims system within 60 days. The firm will be paid $187,500 in two parts, plus $7,500 a month to host the website, according to court records.
Sorting through the claims will be an enormous process, said Darr, who has heard from alleged victims from Chelsea and Framingham to Russia and China. He has also been contacted by lawyers saying they represent large groups, including 60,000 people in South Africa.
As part of the claim process, Darr said, payments will have to be approved by the Office of Foreign Assets Control, part of the US Department of the Treasury, to ensure the money is not being paid to terrorists or traffickers.
Shafiq can be reached at lutayashafiq-AT-gmail.com. Follow him on Twitter  @LutayaShafiq
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