TelexFree Fraud Victims Can Now File Claims Online

James Merill, Telexfree, CEO


An online claim site is now live for victims of the TelexFree Inc. fraud.

Participants in the scheme, who number nearly 2 million and live in virtually every country in the world, can log in to the website and file claims for alleged losses, according to the bankruptcy trustee in the case.

The deadline for filing a claim is Sept. 26, although any payments will likely take much longer.

TelexFree, formerly based in Marlborough and Brazil, is believed to be the largest Ponzi scheme of all time, in terms of the number of people affected. The company, which nominally sold Internet phone service, grew into a vast global investment swindle, prosecutors have alleged, with investors believing they had $3 billion in their accounts.

TelexFree filed for federal bankruptcy protection two years ago. The company’s two top executives in Marlborough are facing criminal charges: James Merrill of Ashland and Carlos Wanzeler, now a fugitive in Brazil. Both also are under scrutiny in Brazil, along with Carlos Costa, the head of TelexFree-related entity there called Ympactus.

All three men have denied wrongdoing. Merrill last week filed a motion to suppress evidence US authorities gathered during a search of the TelexFree office in April 2014.

The criminal trial is currently slated to start in October. Prosecutors have been seeking Wanzeler’s return, but the United States does not have a formal extradition treaty with Brazil.

Prosecutors would have to get guilty verdicts or guilty pleas in order to release more than $150 million in assets seized from the defendants to participants found to have lost money. Claimants, who put about $1 billion into the scheme, are expected to receive a small portion of their losses.

Stephen Darr, the Boston bankruptcy trustee who has overseen the building of the claim website, said a “soft launch” of the system starting last Friday has gone relativity smoothly. About 450 claims have been submitted, he said, and the system designer has said the site can handle up to 200,000 people filing at once.

“We’re pretty happy with the system so far,’’ Darr said. “We’ll see what happens when the world gets hold of it.”

The online claims process is available in English, Spanish, and Portuguese and is 17 pages long, including instructions. Claimants can register by creating an account with a current e-mail address; they don’t have to remember their TelexFree passwords.

The trustee will send notices to 900,000 participants for whom he has e-mail addresses — about half the total — to inform them that the site is available.

Participants who reaped profits from TelexFree are not eligible to claim losses. Neither are participants in Ympactus, the Brazilian arm of the alleged fraud. Authorities in Brazil are working on that case separately.

The penalty for filing a fraudulent claim is a fine of up to $500,000, up to five years in jail, or both.

Source: Boston Globe

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