In a September 28th trial brief filing, the DOJ claim TelexFree was

a massive pyramid scheme that roped in about a million people worldwide and caused about a billion dollars in losses.

TelexFree paid participants a yearly return of over 200% without requiring them to sell anything.

All they had to do was (a) pay TelexFree $1425 and then (b) spend a few minutes cutting and pasting tiny classified ads to a handful of web sites every day.

The company paid participants to recruit others too, but never required significant sales of an actual product.

Unsurprisingly, TelexFree collapsed; by April 2014 it owed its participants about $5,000,000,000.

At Merrill’s trial, currently scheduled for October 24th, the DOJ plan to

prove that TelexFree was a Ponzi and pyramid scheme (and) that Merrill knew this almost from the beginning, and yet continued to actively promote the company and profited from its illegal proceeds.

The DOJ’s filing is 46 pages long, so in the interest of brevity I’ve condensed the brief with only minimal commentary.

Read on for a brief of the DOJ’s case against James Merrill.

Introduction

TelexFree was a “network marketing company”1 that offered its participants something more: according to James Merrill, the “opportunity of a lifetime”; according to co-defendant Carlos Wanzeler, a way to “change your life”; and, again according to Merrill, a chance to be part of something that Fortune 500 corporations (that “squeeze employees until there’s nothing left”) feared – “strength in numbers that network marketing produces.”

By the end, about 2,000,000 people around the world signed up to become promoters for TelexFree.

Between about February 2012 and April 2014, TelexFree participants bought about 6,500,000 promoter accounts with the company.

But from its beginning, TelexFree was a fundamentally fraudulent business.

Claiming to sell a retail product, TelexFree offered a complex, jargon-filled compensation plan that transformed the entire enterprise into a pyramid scheme and a Ponzi scheme (depending on which part of the compensation plan a participant used).

And, like all such schemes, it collapsed.

TelexFree in the United States

Before TelexFree, James Merrill and Carlos Wanzeler had worked together since about 1988.

In about 2002, Merrill and Wanzeler joined their first network marketing business together, Common Cents Communications, Inc.

Through this business, the men were agents for a now defunct telecom company called WorldxChange.

By the mid to late-2000’s, Merrill and Wanzeler had started another company, called Diskavontade (also called Brazilian Help, Inc.).

Diskavontade maintained an office in Shrewsbury but later moved to what became TelexFree’s headquarters at 225 Cedar Street, Marlborough, Massachusetts.

Merrill and Wanzeler’s next business venture, TelexFree, was formed in February 2012, when Common Cents Communications changed its name.

TelexFree in Brazil

The idea for TelexFree actually originated in

🤖 Quick Answer

What were the main characteristics of the TelexFree scheme according to DOJ allegations?
TelexFree operated as a pyramid scheme offering participants yearly returns exceeding 200% without requiring product sales. Members paid $1,425 and performed minimal tasks like posting classified ads online while earning commissions for recruiting others, generating approximately $5 billion in losses before collapsing in April 2014.

What charges does the DOJ plan to prove at James Merrill's trial?
The DOJ intends to demonstrate that TelexFree functioned as both a Ponzi and pyramid scheme, presenting evidence that the company systematically defrauded approximately one million participants worldwide through unsustainable return promises and recruitment-based compensation structures rather than legitimate product sales.

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