TelexFree President Pleads Guilty
TelexFree originated in Brazil before moving operations to Marlborough, MA, sold VOIP phone-service plans. It promised annual returns of 200% or more for members, known as "Promoters," who recruited mew members and placed TelexFree advertisements on free ad sites, according to the Securities and Exchange Commission.
In reality, prosecutors said, TelexFree was a pyramid scheme, bringing in only a fraction of its revenue from sales of VOIP service and paying the returns it had promised to its existing promoters only with the money derived from recruiting new members.
Merrill accepted a plea agreement just weeks before he was scheduled to go to trial on nine counts stemming from the fraud, which resulted in the collapse of TelexFree in 2014. The deal will limit his sentence to no more than 10 years in prison, sparing him from a possible 180 years if he had been found guilty at trial. Merrill's business partner, Carlos Wanzeler, fled to Brazil in 2014 and has avoided extradition.
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