TelexFree bank to pay $3.5 million settlement
Over two years of operations, TelexFree has employed multiple financial accounts, including domestic and international bank accounts and various online payment processors, to facilitate the fraudulent offer or sale of securities in Massachusetts.
Almost all financial institutions have terminated their relationship with TelexFree after only a few months of business.
Recently, frantic emails between TelexFree management and financial institutions paint an entirely bleak picture of continuing TelexFree financial operations.
TelexFree operations have become a risk that financial institutions are no longer willing to bear.
As described by one financial institution, “no US bank or processor… will accept your [TelexFree] business given that you are on month five of the Visa Chargeback monitoring program. You are only one of three merchants in the USA on month five so you are a real hot-potato as they say.”
-TelexFree is a “billion dollar Ponzi scheme” lawsuit, filed by Massachusetts Securities Division (April 2014)
Against the backdrop of ongoing banking issues due to the problematic nature of their business model, TelexFree hopped from one bank to another in a desperate bid to keep the company’s financial channels open.
Around August 2013, TelexFree co-owner James Merrill approached Fidelity Bank for help and was permitted to open up two accounts. That approval stretched to the granting of permission to open a third account in September.
Despite multiple banks shutting down TelexFree’s accounts after the sheer number of volumes raised alarms, it seemed TelexFree had found a long-lasting relationship in Fidelity.
Just one small problem…
The President of the bank was James Merrill’s brother, John F. Merrill.