Judge Thais Borges of the Acre State Court issued a definitive ruling on September 16, declaring TelexFree's Brazilian operations a Ponzi scheme. The decision immediately imposed a $782,521 fine for compensatory damages, alongside an order for the company to reimburse all its Brazilian victims.

This ruling followed an independent audit by Ernst & Young, which provided court-ordered expertise earlier in the year. The auditor's findings presented conclusive evidence that TelexFree functioned as a financial pyramid scheme. TelexFree's attempts to suppress the report failed, and Judge Borges later described its contents as sufficient for her judicial determination.

All contracts between TelexFree and its affiliate investors in Brazil were declared null and void. The court specifically found TelexFree to be "a financial pyramid, not a multi-level marketing network." As a direct consequence, the company was ordered to return all funds received from "partners" and "publishers" for the acquisition of AdCentral and AdCentral Family positions.

The total amount TelexFree Brazil must repay its victims remains undisclosed, though it is expected to reach tens of millions of dollars. The company also faces potential fines of $26,000 for each TelexFree contract found to have been created involving Brazilians.

Ympactus, TelexFree's Brazilian corporate arm, has been dissolved by the court. This legal action concludes a case initially filed by the Acre Public Prosecutors in June 2013, bringing years of litigation to a close.

Following the initial suspension of TelexFree's business in Brazil, several top Brazilian affiliates continued to promote the scheme, extending its reach into the United States and Peru. Any net-winners among individual Brazilian affiliates will have their earnings deducted from amounts claimed as restitution.

The criminal proceedings against TelexFree insiders continue to unfold in other jurisdictions. James Merrill, one of the principals, remains under home detention in the United States. Carlos Costa and Carlos Wanzeler are believed to reside in Brazil; Wanzeler fled the U.S. as a fugitive in 2014 to avoid arrest.

TelexFree's lawyers, when contacted by Brazilian publication Globo for comment on the decision, stated the company had not yet been formally notified and would form a position only after official receipt of the ruling.