Judge Thais Khalil yesterday rejected mediation proposals from Carlos Costa regarding TelexFree's operations in Brazil. This decision followed a prior rejection by Acre's Public Prosecutors, pushing the scheme closer to a full civil trial.

Costa had spent days publicly declaring that "god used him" to establish TelexFree, claiming "nobody will take it" away. The company's Facebook page even published a video with the caption, "The battle is coming to an end. We trust in God, we trust in justice." These public statements contrasted sharply with the legal proceedings.

At the mediation conference, Costa personally presented two proposals. His first suggestion called for TelexFree to continue its operations as if authorities had never intervened. This proposal aimed to resume the pyramid scheme without any changes.

The second proposal was slightly less direct. Costa offered to pay out existing affiliate investors. These investors would then need to re-register in the United States to continue their involvement with TelexFree. Both proposals sought to restart TelexFree's Brazilian business, making their rejection by Judge Khalil unsurprising.

TelexFree's strategy appears to involve unfreezing its funds and transferring as much as possible offshore. The company seemingly believes its US operations will avoid scrutiny from the SEC.

In a surprising move, Judge Khalil also blocked the release of TelexFree funds intended for a construction firm. An earlier ruling had permitted this payment, which aimed to preserve TelexFree's stake in a project. The court planned to use this stake later to refund affiliate investors. The suspension likely stemmed from new evidence presented by Public Prosecutors.

Judge Khalil's decision now clears the path for the civil action against TelexFree to proceed. TelexFree had argued that Acre's Public Prosecutors lacked standing to sue the company, but Khalil dismissed this argument. A trial is expected sometime in 2014. Judge Khalil is currently reviewing over 40,000 documents provided by Acre's Public Prosecutors as evidence.