Not good news for all those network marketers that became independent sales associates and jumped on the TelexFree bandwagon.
TelexFree is operated as a multi-level marketing company, and currently has over 700,000 associates or promoters (the “Promoters”) worldwide. Prior to the filing of these Chapter 11 Cases, TelexFree compensated Promoters for the sales of the VoIP product, the placing of advertisements and the recruitment of other Promoters down line.
Prior to the filing of these Chapter 11 Cases, TelexFree compensated Promoters for the sales of the VoIP product, the placing of advertisements and the recruitment of other Promoters down line. – See more at: http://www.saibaworld.com/2014/04/telexfree-files-for-bankruptcy-in-usa.html#sthash.HBaMAUeX.dpuf
TelexFree Files for Chapter 11 Bankruptcy
On April 13, 2014, TelexFree, Inc., TelexFree, LLC and TelexFree Financial, Inc. filed for protection under chapter 11 of the United States Code.Those cases currently are pending in the Bankruptcy Court for the District of Massachusetts under Case Nos. 14-40987, 14-40988 and 14-40989. Information can be found on the Bankruptcy Court’s docket at https://ecf.mab.uscourts.gov/ or at the Kurtzman Carson website at http://www.kccllc.net/TelexFree.
TelexFREE has suspended all business activity while they address certain issues in the Bankruptcy Court and address pending proceedings by the SEC and other government agencies. The commissions of 30 Top earners are frozen.
Since we are not currently in a position to support our network, it is likely Customers will experience either interruption or discontinuation of service. Independent Associates and Promoters should not be representing TelexFree on a going forward basis absent approval of a new compensation plan by the Bankruptcy.” TelexFREE
TelexFree Founders Indicted On Fraud Charges
On July 23, 2014 a Massachusetts grand jury indicted TelexFree co-founders James Merrill and Carlos Wanzeler on multiple fraud charges in what authorities have alleged was a massive Pyramid/Ponzi scheme that may have defrauded victims out of hundreds of millions of dollars. Merrill and Wanzeler were charged with one count of conspiracy to commit wire fraud and eight counts of wire fraud. Each wire fraud count carries a maximum twenty-year prison term as well as monetary penalties.
The indictment also seeks the forfeiture of tens of millions of dollars, real estate, and luxury vehicles and watercraft belonging to the two men. Merrill is currently in custody after his arrest in early May, while Wanzeler remains a fugitive and is believed to be in Brazil.
You can view the actual document filed below.
Plenty of lessons to learn from TelexFree
Unfortunately this type of negative story is a huge part of why Network Marketing and the direct sales industry get such a bum rap. As a professional network marketer I am always saddened when I see people that desire to get involved with network marketing, become an entrepreneur and make money from home but they do not conduct enough research (due diligence) before joining a business opportunity.
TelexFREE marketers flooded the internet with ads, fake reviews, which made it very difficult for new and interested people to get the correct information about the company. Many good network marketing companies have been hurt by their own marketers because of bad advertising practices.
Before you join that next business opportunity make it your mission to FIRST educate yourself about the direct sales or network marketing industry and get some real marketing training!