TelexFree pyramid scheme founder to repay $3.6M
An Ashland man and co-owner of former Marlborough company TelexFree must pay $3.6 million to victims of a pyramid scheme that targeted Latino immigrants.
In addition to paying restitution of $3.6 million, James Merrill of Ashland is barred from being an officer or director of a company for life, according to the U.S. Securities and Exchange Commission.
That judgement, however, has already been met as part of Merrill's criminal trial. He recently pled guilty to criminal charges and was sentenced to six years in prison.
A co-owner of the company, Carlos Wanzeler, is a fugitive from justice, according to the SEC.
Joseph Craft, a Kentucky man and former CFO of the company, was barred from serving as an officer or director for five years and was ordered to pay a $50,000 penalty and $298,708.
The company, which claimed to run a multi-level marketing company selling telephone services based on voice-over-internet technology, According to the SEC, the company sold memberships promising annual returns of 200 percent or more for those who promoted the company by recruiting new members and placing company advertisements online.
The SEC alleged the company’s voice-over-internet sales brought revenue of $1.3 million between August 2012 and March 2014, barely 1 percent of the $1.1 billion needed to cover its promised payments to promoters.
As a result, the company paid earlier investors with money received from newer investors.
WBJ Web Partners
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