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Posted by ASDUpdates on August 15, 2018No Comments

SEC Obtains Final Judgment Ordering Pyramid Scheme Promoter to Pay Over $1 Million

Litigation Release No. 24235 / August 14, 2018

Securities and Exchange Commission v. TelexFree, Inc. et al., No. 14-cv-11858 (D. Mass. filed Apr. 17, 2014)

A promoter of a pyramid scheme targeting Latino communities has agreed to transfer assets valued at over $1 million in a related bankruptcy proceeding and admit his role in the scheme to settle charges brought by the Securities and Exchange Commission against him and nine other defendants.

The final judgment, entered on August 14, 2018 by a federal district court in Boston, Massachusetts, permanently enjoins Santiago De la Rosa from violating Section 5 of the Securities Act of 1933 and forbids De la Rosa from participating in a multi-level marketing scheme that solely or primarily derives its revenue from the recruitment of others. The judgment also orders De la Rosa to pay $1,092,013 in disgorgement and prejudgment interest, but that is deemed satisfied by an order requiring De la Rosa to transfer certain assets valued at $992,013 and pay $100,000 to settle an adversary action in a related bankruptcy case. In settling the SEC’s charges, De la Rosa admitted that he was a promoter of TelexFree, appearing at public events to recruit for TelexFree and in promotional videos that were posted on YouTube.

The SEC has previously obtained final judgments by consent against TelexFree’s co-owner and president and its CFOits international sales directora promoter of the pyramid scheme, and another promoter, who also was ordered to jail for civil contemptarising from his repeated violations of court orders.

The SEC’s litigation continues against TelexFree, its other co-owner, and the remaining promoter of the alleged TelexFree pyramid scheme.

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