The Washington Utilities and Transportation Commission granted TelexFree LLC a telecommunications registration on April 20, 2014. Just one day earlier, both Massachusetts and federal regulators filed complaints against the company, alleging it operated a Ponzi and pyramid scheme. The approval was quickly jeopardized by these legal actions.

TelexFree had begun filing applications to register as a telecommunications provider in various US states. This move aimed to reduce the impact of fraudulent activities the company had engaged in over the prior two years. Joseph Isaacs, a consultant widely credited with helping bring down the Fortune High-Tech Marketing pyramid scheme, was contracted to assist with these filings.

Isaacs, working through his company ISG Telecom, submitted the telecommunication registrations for TelexFree. The Washington registration form stated that all telecommunications companies must register with the Utilities and Transport Commission (UTC) before starting operations in the state. On March 21, an application was filed, seeking permission for TelexFree to offer "long distance interLATA" services in Washington.

Carlos Costa, James Merrill, and Carlos Wanzeler were listed as officers and directors of TelexFree on the application. Isaacs served as the "regulatory contact." Steven King, Executive Director and Secretary of UTC, confirmed the registration in a letter to Jim Merrill dated April 16. The letter stated, "Effective April 20, 2014, the Utilities and Transportation Commission grants TELEXFREE, LLC registration in Docket UT-140457 as a competitive telecommunications company."

Upon learning of the cases filed by the Massachusetts Securities Division and the SEC, Isaacs immediately distanced himself from TelexFree's applications. He no longer wished to be associated with them, in Washington or any other state.

In an April 18 email addressed to "Commissions Secretaries (at) ALL United States Public (Utility) Service Commissions," Isaacs wrote, "It has come to my attention this week that my client, TelexFree LLC, whom has applied for or has recently been approved to provide telecommunications services in your state, has misrepresented their intentions, their business model, their customer base and the source of all their revenue, income and profits declared on their 2013 financial statements that were provided to this commission for the approval of their petitions (applications)."

Isaacs added, "In my twenty years as a consultant to telecommunication carriers and applicants, I have never experienced a client who provided such false and misleading information. Apparently the affidavits signed by the ex-managing member, Jim Merrill, were not truthful either. Both ISG-Telecom Staff and the Commissions have been duped by their misleading information." He concluded by directing all future inquiries regarding TelexFree LLC directly to Jim Merrill.