Category Archives: TelexFree SEC Case

TelexFree: Final Judgment Against Steven Labriola

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23880 / July 14, 2017

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

SEC Obtains Final Judgment Against Officer of Pyramid Scheme Targeting Latino Community

The Securities and Exchange Commission announced today that it has obtained a final judgment in a fraud case against the international sales director of a pyramid scheme targeting Latino communities.

The final judgment, entered on consent by a federal district court in Boston, Massachusetts, permanently enjoins Steven Labriola from violating Section 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, imposes a conduct-based injunction, and orders Labriola to pay approximately $25,000 in disgorgement and prejudgment interest. As part of the settlement, Labriola admitted that he was responsible for TelexFree’s relationships with its promoters, ran numerous training conferences, and that he was one of the main public faces of TelexFree, providing periodic “corporate updates” and appearing in other promotional videos that were posted on YouTube.

The SEC has previously obtained a final judgment by consent against a promoter of TelexFree, who also was ordered to jail for civil contemptarising from his repeated violations of court orders. Two other defendants in the SEC’s action – James M. Merrill, the co-owner and president of TelexFree, and Carlos N. Wanzeler, the co-owner and treasurer of TelexFree – were charged criminally. Merrill pled guilty to the criminal charges and was sentenced to six years’ imprisonment. Wanzeler is a fugitive from justice.

The SEC’s litigation continues against TelexFree, Merrill, Wanzeler, Joseph H. Craft, Telexfree’s CFO, and the remaining promoters of the alleged TelexFree pyramid scheme.

 

https://www.sec.gov/litigation/litreleases/2017/lr23880.htm

TelexFree: SEC Status Report on Civil Case 14-cv-11858

telexfree-logoPerhaps I am confused or maybe it is a misprint, but this is the Status Report in the TelexFree civil case brought by the SEC:

 

Status Report

 
Plaintiff Securities and Exchange Commission hereby informs the Court that, yesterday, October 24, 2016, in United States District Court for the District of Massachusetts, defendant James Merrill entered a guilty plea in the criminal case USA v. Wanzeler, et al. (D. Mass. 4:14-cr- 40028) pending before Judge Hillman. The Court did not accept Merrill’s guilty plea at that time and has scheduled sentencing for February 2, 2017. The other criminal defendant, Carlos Wanzeler, fled to Brazil upon learning of the federal charges filed against him where he remains. There is currently still a federal warrant for his arrest.

 
Respectfully submitted,
/s/ Deena R. Bernstein
Deena R. Bernstein (Mass. Bar No. 558721)
Attorney for Plaintiff
SECURITIES AND EXCHANGE COMMISSION

Yep, it says that the court did not accept Merrill’s guilty plea at that time.  OK, then why did they schedule sentencing?

TelexFree: Judge Gorton Orders Hearing for Rodrigues

newtelexfreelogoI am not sure if this is along the lines of what Rodrigues was planning bu asking for a hearing, the Judge’s Order requires a “sworn financial statement”.  Be careful of what you ask, Sann…..

 

ORDER

 
The Court will convene a hearing on the motion of defendant Sanderley Rodrigues de Vasconcelos for release from custody and for approval of a payment plan (Docket No. 376) on Thursday, March 17, 2016 at 11:15 am. At that hearing defendant will be afforded the opportunity to prove that he is unable to purge his civil contempt by the submission of a sworn financial statement providing a complete accounting of defendant’s assets, an affidavit and/or sworn testimony. Regardless of the means chosen by defendant, his presentation of evidence will be subject to the Court’s holding in its Memorandum and Order dated December 18, 2015 (Docket No. 359) with respect to defendant’s waiver of the Fifth Amendment privilege against self-incrimination.
Defendant shall appear at the hearing via video conference and his counsel may also do likewise.

 
So ordered.

TelexFree: SEC Files Opposition to Rodrigues’ Motion for Release from Custody and Payment Plan

sann-rodrigues-top-telexfree-investorThe SEC has filed its Opposition to a February 15th Motion from Sanderley Rodrigues de Vascolcelos for “Release from Custody and to Approve a Payment Plan” or to schedule an Evidentiary Hearing. This opposition begins like this:

Rodrigues now attempts to obtain release from custody for civil contempt by arguing that: 1) he should be released because he has adequately demonstrated his inability to pay back the dissipated funds as required by this Court’s December 21, 2015 order and instead should be allowed to implement a payment plan; and 2) he should be allowed to use other frozen funds to replace the funds that he already dissipated. Neither of these arguments is availing. Instead, at minimum, this Court should require an evidentiary hearing wherein he demonstrates his inability to obtain funds where he would be subject to cross-examination. If this Court does order his release, the Commission respectfully requests that any payment plan ordered as a condition of the release require him to pay more than 20% of money earned from any business development course, book or other endeavor.

The SEC goes on to state that Rodrigues has not proven that he has an inability to comply with the Court’s Order, or to use it as an affirmative defense. Instead, they say, Rodrigues only provided a cursory declaration saying the accounting he provided was adequate, and believes the SEC’s own status report was evidence that this accounting adequately demonstrates his inability to pay. But, the information the SEC has was “unsworn information” regarding Rodrigues’ domestic holdings, but lacked information about his international holdings which are outside the asset freeze. The SEC did not push for a sworn accounting in the hopes that the involved parties could resolve the issue.

The Commission’s decision not to push for a sworn accounting, however, does not relieve Rodrigues’ burden to provide to this Court detailed sworn evidence that he has an inability to pay and thereby excuse his failure to purge his contempt. Rodrigues seeks to avoid this requirement by suggesting that he must not have the ability to comply because he is still in jail, which is evidence enough that he cannot purge his contempt.

 

 

Yet, Rodrigues has only been in jail for 27 days. He has cited no case that supports that less than a month in jail is sufficient evidence that he has no ability to comply with a court order without other evidence.
Thus, at minimum the Commission requests an evidentiary hearing at which Rodrigues, under oath provide evidence that he has an inability to comply with this Court’s order and that he be subject to cross-examination to test the veracity of his claim.

And, the SEC is not going along with Rodrigues’ suggestion that he is allowed to use Frozen Assets to pay of the contempt. I have uploaded the full document onto the Files Website.

Adding to their arguments, there is a Declaration filed by Mark Albers, a forensic accountant in the Boston Office of the SEC, part of which states this:

I was asked to review certain documents, including bank statements, bank transaction documents, and bank wire transfer records concerning personal and business accounts under the control of Rodrigues, as well as bank accounts belonging to defendants TelexFree, Inc. and TelexFree, LLC (collectively “TelexFree”). Members of the Commission’s accounting staff working under my supervision assisted with the review of these documents.

 

The bank records reflect that, from October 2012 through April 2014, business or personal accounts under the control of Rodrigues likely received more than $1.51 million from TelexFree or its investors.

And, it gets even better:

Based on our communications with Mr. Rodrigues, it is our understanding that he had no other source of income during this time period other than TelexFree-related activity.

 

 

There was an additional $3.92 million in cash deposits made into Mr. Rodrigues’ personal and business accounts over this time period. Assuming all of those deposits were related to TelexFree, the total amount of Mr. Rodrigues’ earnings from Telexfree could be as high as $5.44 million.

And there you have it. It is a poetic equivalent to “Water, water everywhere and nary a drop to drink”.

TelexFree: Sann Rodrigues Wants Out of Jail……

You just can’t make this stuff up.  telexfree-logo

SannRodrigues has filed a Motion for release from custody because of what is referred to as the “impossibility to comply with the Memorandum & Order entered on December 21, 2015”. And, Rodrigues wants the Court to order and approve the payment plan for compliance with the Purge Order originally proposed by Mr. Rodrigues. The Court previously denied this idea, so I suppose he wants to try it again. Or, of that doesn’t work, Rodrigues requests an evidentiary hearing. Good luck with that.

In support of this Motion, Rodrigues states:

  • He has spent 26 days in custody of the US Marshall Service on an indefinite sentence for civil contempt
  • Rodrigues does not have the ability to comply with the Court’s Order to pay the SEC approximately $ 474,503.00
  • While Rodrigues has substantial assets that could easily pay this sum, all assets are frozen and cannot be used to purge the contempt.
  • Rodrigues is not able to work outside of the home as he was under house arrest as a result of a Pretrial release order.
  • Due to “dire financial circumstances”, Rodrigues has relied on “modest gifts and loans” from friends and family to support himself, his wife and 2 minor children.
  • Unless he is permitted to use frozen assets to purge the contempt or permitted to make payments, he will remain incarcerated.
  • In an effort to satisfy his obligations, he has received a job offer from a Transportation company in Tampa which would allow him to make payments.

The Motion goes on to further lament how bad of a position Rodrigues is now in after the asset freeze which prevents him from purging the contempt.  Here’s a link to the today’s filing and the 2 Exhibits.

 

Let me call you a Wambulance-  wambulance

TelexFree: Rodrigues to Remain Incarcerated in Florida

sann-rodrigues-top-telexfree-investor

We have new info on Sann Rodrigues and his stay in the “cross-bar hotel”.

Judge Nathaniel M. Gorton has issued an ELECTRONIC ORDER granting Motion for Clarification and granting the Motion to Allow Defendant to Remain Incarcerated in Florida:

“It is the intention of this Court that defendant be incarcerated in an appropriate penal facility in Florida until his contempt is purged or further notice of this Court.”

TelexFree: SEC Files Motion for Clarification of Terms of Incarceration

sec-logo

Plaintiff Securities and Exchange Commission (“the Commission” or “SEC”) files this Status Report and Motion for Clarification of Terms of Incarceration.

Yesterday, on January 20, 2016, Sanderley Rodrigues (“Rodrigues”) was arrested by the U.S. Marshals Service in Florida. After his arrest he appeared before Magistrate Judge Elizabeth Jenkins of the United States District Court for the Middle District of Florida (Tampa) regarding the terms of his incarceration. The court ordered him detained in the Pinellas County Jail in Florida pending a further hearing on Friday, January 22, 2016, at 2pm to determine whether he can travel to Massachusetts on bond or whether the U.S. Marshals Service must escort him to Massachusetts. The Commission seek clarification as to whether he needs to be transported to Massachusetts by the United States Marshals Service or whether he should remain incarcerated in Florida pending further order of this Court. If he needs to be detained in Massachusetts, the Commission seeks clarification as to whether he may travel on bond using a commercial carrier or whether he needs to be escorted by the U.S. Marshal Service.

TelexFree: Judge Denies One Motion, Grants Another, and Rodrigues Remanded into Custody

newtelexfreelogoNot hard to believe, Judge Gorton has denied Sann Rodrigues’ recent Motion to Stay Contempt Proceedings and Approve a Payment Plan. It might have something to do with this motion being filed a day before the Court’s ordered deadline to return a large sum of money he used after the Asset freeze. Rodrigues wanted to enter into a payment plan to repay this money, but without disclosing the length of time or monthly payments he proposed.  It was a waste of paper, actually.

 

And his lack of compliance with the Court’s Order has annoyed the judge greatly; this Order was entered on January 15th:

ORDER
This Court, by order entered December 18, 2015 (Docket No. 359), held the defendant, Sanderley Rodrigues de Vasconcelos, in contempt but deferred the imposition of sanctions to give him an opportunity to purge his contempt. Defendant, having failed to comply with the conditions of that order to restore assets dissipated in violation of the asset freeze imposed upon him by the temporary restraining order (Docket Nos. 13, 42 and 52) and preliminary injunction (Docket No. 89), is hereby remanded to the custody of the United States Marshals Service to be incarcerated until further order of the Court.

But, Judge Gorton did approve a Motion allowing Rodrigues to open a new bank account so he has some where to place all the money he plans on making with his motivational books and videos.  This account is not subject to the Injunction.

 

TelexFree: SEC Opposes “Payment Plan” and Stay of Contempt Proceedings

telexfree-logoThe SEC filed its opposition to a Motion filed by Rodrigues to “Stay the Contempt Proceedings and Approve a Payment Plan”.  The problem is the Court had already Ordered him (December 2015) to return his TelexFree fraud money.

At the eleventh hour Rodrigues attempts to avoid the consequences of this Court’s orders by essentially making two arguments: 1) he should be allowed to avoid incarceration by promising to restore assets dissipated in violation of this Court’s order through a payment plan with no defined amounts over an infinite period of time; and 2) he can avoid incarceration because he has not violated bail in an unrelated visa fraud case. Neither of these arguments is availing. Instead, this Court should, based on its own inherent authority, order Rodrigues incarcerated until such time as he has complied with this Court’s order.

……

On December 18, 2015, this Court found Rodrigues in contempt and ordered him to restore $333,973 in dissipated assets as well as reconveyance three wrongfully transferred properties or provide the Court with a detailed plan as to how he would otherwise cure the contempt as to the properties. (ECF 359.) He was ordered to do so on or before January 15, 2016. On January 13, 2016, counsel for Rodrigues contacted the Commission seeking consent to an ill-defined payment plan. (Bernstein Dec. ¶ 4.) The Commission did not agree to the payment plan. (Id.) On the afternoon of January 14, 2016, the day before the court-ordered deadline, Rodrigues filed his motion.

….

His purported plan provides no details as to how much he would pay on a monthly basis, how long the payment plan would be in effect and/or any rationale as to why he should be allowed to retain 80% of the proceeds of any sales from the so-called videos and books that he plans to sell while remitting 20% toward the restoration of assets. The proposed payment plan is one more delaying tactic to avoid taking responsibility for returning money—most of which he obtained through the TelexFree fraud. He should not be able to avoid his responsibility by proposing a sham payment plan.

Rodrigues proposed that he use the proceeds of his “motivational books and videos” to comply with the Court’s Order, but his skewed view of things is that he keeps 80% of proceeds and gives the remaining 20% to pay off the $333,973 that the Court ordered him to return.

Rodrigues also believes that the Court cannot toss his butt in jail for Contempt because he is out on bail in an unrelated criminal Visa Fraud case. Let’s just say the Court disagrees with that illogical and misguided theory. Even more bizarre is his attorney seems to go along with this nonsense.

See you in jail soon, Sanderley!

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