Federal prosecutors filed charges this week against the owners of TelexFree Inc., which they said ran a billion-dollar pyramid scheme, The Boston Globe reported.
James M. Merrill, 53, of Ashland, co-owner of TelexFree Inc., was arrested Friday afternoon in Worcester. Authorities also have issued a warrant for the arrest of co-owner Carlos N. Wanzeler, 45, of Northborough, who is now a fugitive. He is believed to have fled to Brazil, federal officials said earlier this week.
Merrill and Wanzeler face a charge of conspiracy to commit wire fraud. The charges were filed in US District Court in Worcester on Friday. According to the Associated Press, Merrill is being held until a bail hearing next week.
The complaint says they operated TelexFree, an internet phone service that made most of its revenue from people buying into the company with a promise of getting paid for posting online ads for it. The scheme allegedly operated from January 2012 until March 2014.
TelexFree filed for bankrupty in April. Securities regulators have frozen its assets.
On April 15, the FBI and the Department of Homeland Security raided the office of the Marlborough-based company as part of an investigation into the alleged Ponzi scheme. Secretary of State William F. Galvin had filed a complaint against the company, alleging the operation of a massive scheme and targeting “the hard-working Brazilian-American community.”
"Using various interrelated bank accounts and entities, TelexFREE has raised over $90,000,000.00 in the Commonwealth and nearly $1,000,000,000.00 worldwide -- often from the honest earnings and savings accounts of Brazilian-Americans and other minority groups."
The raid was triggered by the company filing for bankrutpcy. Securities regulators also froze the company’s assets.