TelexFree reversed its promises to existing investors yesterday, halting weekly payouts for old contracts and prompting angry affiliates to storm the company's Massachusetts headquarters. This decision followed earlier assurances that pre-March investments would continue to yield returns, despite an ongoing SEC investigation into the company. The change affects thousands of affiliates and over four million reported AdCentral investment positions.
The announcement appeared quietly in affiliates' back offices. TelexFree stated that "regulatory requirements" now mandate all promoters receiving commissions must have personally enrolled retail customers. Specifically, certain promoters must be "ADFamily Plus Qualified" with at least five personal customers and have recruited two "ADFamily Qualified Promoters."
TelexFree also shut down its payment system, preventing withdrawals. Existing investors must now either sell or personally invest in five VOIP positions, costing $249.50 a month, and recruit two affiliates who also meet these requirements. Failure to comply will stop the $20 weekly AdCentral ROIs. This move hits hardest those who depended on regular withdrawals or made last-minute investments based on previous assurances.
As affiliates gathered, a frustrated Steve Labriola, a TelexFree executive, emerged to address the crowd. He asked people to turn off cell phones, citing previous instances of his remarks appearing on YouTube. The crowd firmly refused. Labriola raised his voice, insisting that "everybody needs five customers. Two personally sponsored agents with five customers to withdraw your funds."
Affiliates pressed him on the "old plan" and the sudden changes. Labriola repeated, "we need customers." As the confrontation grew more heated, he turned away from the main crowd. Later, an elderly woman approached Labriola, wagging her finger at him.
The new requirements effectively translate into an additional $249.50 monthly withdrawal fee for many investors. Those with large invested sums may wait until their yearly ROIs expire before paying the fee. But affiliates who rely on monthly withdrawals face significant hardship, unable to afford the new costs to access their returns.
As the situation escalated, with affiliates refusing to leave the office, police were called to restore order. Responding officers found the front door blocked by the crowd. Affiliates told police, "We are employees. They have our money, they don't want to give it back!" Officers then entered the office, presumably to speak with TelexFree management.