The FBI and the Department of Homeland Security raided the office of Marlborough-based company TelexFree Inc. as part of an investigation into an alleged $1 billion Ponzi scheme, The Boston Globe reports.
On Tuesday, Secretary of State William F. Galvin filed a complaint against the company and accused them of operating a pyramid and Ponzi scheme that targeted “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 state of Massachusetts is seeking a cease and desist order, an accounting of all proceeds received as a result of wrongdoing, restitution to the victims, a fine, and that the company dissgorge of all profits made from alleged wrongdoing.
TelexFREE collectively includes TelexFREE Inc., a Massachusetts company and TelexFREE LLC, a Nevada company.
According to Forbes, TelexFREE’s business was centered on an internet phone service, which was packaged with an investment program that promised huge returns as well as bonuses for recruiting other investors.
In addition to the incentives for participants to recruit new investors, TelexFREE solicited potential investors by hosting wild parties with a "rock concert atmosphere" and raucous cheering that included the "wave." Potential investors were told that the investment was the "opportunity of a lifetime," and, like many other schemes, were enticed by stories of wealth realized by top participants.
According to The Boston Globe, TelexFree is being investigated in the Dominican Republic, Rwanda, and Uganda, and was shut down in Brazil last year after a judge ruled it was a fraudulent operation.
TelexFree drew people in by the thousands with the allure of easy profits based on a business that seemed plausible to many: Internet phone service that provided for inexpensive international calls. The company appears to have preyed on a hard-working immigrant culture of saving money and staying in touch with family from their home countries.