Steven Labriola, a former International Marketing Manager for the TelexFree pyramid scheme, settled with the TelexFree class-action plaintiffs in August 2025, avoiding a monetary payment but agreeing to extensive cooperation.
The settlement, approved by the court, requires no direct financial contribution from Labriola. Instead, he committed to full, truthful, and ongoing cooperation with the plaintiffs. This agreement hinges on Labriola's representation that he received no funds or benefits attributable to TelexFree's unlawful operations, beyond standard fees for services rendered between 2012 and 2014.
This arrangement follows a 2017 settlement with the Securities and Exchange Commission (SEC), where Labriola agreed to return $98,963 to TelexFree victims. TelexFree, which collapsed in 2014, operated as a Voice-over-IP (VoIP) service and simultaneously ran a multi-level marketing program. Federal authorities later identified this MLM structure as a vast pyramid scheme that defrauded hundreds of thousands of participants globally. The company, founded by James Merrill and Carlos Wanzeler, promised substantial returns to investors who purchased "ad packs" and recruited new members. The fraud is estimated to have cost victims over $3 billion before its collapse and subsequent federal investigations in both the United States and Brazil.
Labriola's cooperation commitment extends until the final TelexFree-related judgment, with no further appeals. His efforts so far include providing access to gigabytes of data from a computer and a laptop seized by the Department of Justice. He has produced all electronic files he possesses related to TelexFree's operational systems and confirmed he holds no company cell phones used during his employment.
For the class-action plaintiffs, led by lead counsel representing the defrauded investors, this cooperation is crucial. It provides potential evidence and insights that can aid in pursuing other defendants or identifying additional assets for victim recovery. The class action litigation seeks to recover damages for all individuals who lost money investing in TelexFree, differentiating from government enforcement actions by directly compensating victims from recovered assets. Cases involving complex financial fraud often rely on insider information to trace convoluted fund flows and establish liabilities across a vast network of participants and entities.
The court's approval of Labriola's settlement in August 2025 finalized a key cooperation agreement, which could assist the class action in its ongoing efforts to recover funds for the hundreds of thousands of victims of the TelexFree pyramid scheme.