James Merrill, cofounder and president of TelexFree, received a final judgment from the Securities and Exchange Commission, closing the civil case related to the multi-billion dollar telecom fraud. This action follows his criminal conviction in March, which resulted in a six-year prison sentence. Joseph Craft, TelexFree's former Chief Financial Officer, also reached a settlement with the SEC.

The SEC confirmed both settlements in a September 12 press release. This came after the Trustee managing TelexFree's bankruptcy estate filed paperwork in July, indicating an agreement had been reached with Craft. The judgments officially conclude the SEC's long-running civil pursuit against the executives of what authorities described as a massive pyramid scheme.

Merrill faces a permanent ban from committing securities fraud and from serving as an officer or director of any public company. His $3.6 million disgorgement obligation for the civil case was deemed satisfied by payments made in his prior criminal proceedings. Craft also received a permanent bar from securities fraud. He faces a five-year prohibition from acting as an officer or director of any public company.

Craft's financial penalties included a $50,000 civil penalty and disgorgement of $298,708, along with prejudgment interest. Separately, the Trustee had sued Craft in April 2016 for $1.2 million. Craft's SEC settlement required him to surrender specific assets to the Trustee, resolving that distinct claim.

TelexFree operated under the guise of selling Voice over Internet Protocol (VoIP) service packages. In reality, the company's revenue primarily stemmed from new investor recruitment and the sale of "ad-packs." Participants purchased these packs, ostensibly to post advertisements online, but returns were largely paid from the money invested by subsequent recruits. This structure characterized the company as a large-scale pyramid or Ponzi scheme.

The fraud scheme collapsed in 2014, leaving hundreds of thousands of investors worldwide with significant losses. Federal prosecutors and the SEC worked to recover funds and hold executives accountable. The SEC's enforcement actions aimed to secure restitution for victims and impose lasting professional sanctions on those responsible.

The final judgments effectively end the professional careers of both men in the public securities sector. Merrill remains incarcerated and is permanently barred from corporate leadership roles. Craft, while not imprisoned, cannot participate in the securities industry for half a decade, coupled with the surrender of assets and financial penalties. The combined actions by the Department of Justice and the SEC underscore a comprehensive approach to prosecuting such complex financial crimes, ensuring accountability across both criminal and civil statutes.