United States Attorney Carmen M. Ortiz of the District of Massachusetts has issued charges against the owners of a Marlborough firm that allegedly bilked money from immigrants on conspiracy to commit wire fraud.
James M. Merrill, 53, of Ashland, and Carlos N. Wanzeler, 45, of Northborough, the owners of TelexFree, were charged in a one count criminal complaint filed in U.S. District Court in Worcester.
If convicted, according to a press statement, they each could face up to 20 years in prison.
Merrill was arrested on May 9, by federal authorities; a warrant was issued for Wanzeler who is a fugitive.
“The scope of this alleged fraud is breathtaking,” Ortiz said in a statement. “As alleged, these defendants devised a scheme which reaped hundreds of millions of dollars from hard working people around the globe.”
Prosecutors alleged that TelexFree was a pyramid scheme. Since 2012, TelexFree allegedly marketed its “voice-over-internet-protocol” service by recruiting “promoters” to post ads for the product online. Each promoter, according to the charges, was required to "buy in" to the company at a certain price and then was compensated later, “under a complex compensation structure, on a weekly basis so long as they posted ads for TelexFree’s VOIP service on the Internet.”
In 2013, according to allegations, “TelexFree reported sales of $1.016 billion, while known sales of the TelexFree VOIP product represented less than 0.1 percent of TelexFree’s total revenues.”
The company later filed for bankruptcy.