Gabriel Castro, Superintendent of Securities, confirmed that Dominican authorities could not act against TelexFree despite knowing it was a fraudulent scheme. The country's legal system contained a "legislative vacuum" which prevented intervention, leaving hundreds of thousands of investors vulnerable. Dominicans lost significant sums to the company, making the nation one of the hardest hit TelexFree markets globally.
Castro stated that the Superintendent of Securities knew about TelexFree's operations. The agency could not proceed because Dominican law offered no guidance on how to handle such cases. This legislative gap left the department unable to prosecute the company or its local promoters.
The agency also reported awareness of other similar businesses operating in the country. These have been reported to the Attorney General. Castro assured the Superintendent of Securities would continue to investigate TelexFree, noting that the Dominican Republic is not the only affected country; the U.S. and Brazil also saw major losses.
The Attorney General's office has not yet taken action. The Institute of Consumer Protection had previously alerted the Attorney General to TelexFree, but that warning went unheeded.
Cesar Pina Toribio, a legal adviser to the Executive, suggested Dominican investors were at fault. He claimed Dominicans are "very naive" when offered "villas and castles." Toribio added that the public already knows of several such business types but still engages in them. He did not clarify how investors should discern a scam when top promoters endorse Ponzi schemes and the government takes no action.
The Dominican Republic, with a population under 10 million, saw widespread participation in TelexFree. This involvement raised questions about why authorities did not intervene sooner, despite the company not being based locally.
A new bill, expected to be presented to parliament today, aims to prevent similar large-scale investment frauds from impacting the country.