Rwanda banned TelexFree in a recent decision, accusing the scheme of operating as a pyramid and laundering Rwf 7 billion ($10.2 million USD) in affiliate funds. A month-long investigation by the Rwandan Ministry of Trade revealed widespread tax evasion and exploitation.
TelexFree registered nationally as "PLI TelexFree (Rwanda) Ltd" in mid-2013. The company then spent nine months collecting money from Rwandan affiliates and transferring the funds offshore.
A Ministry of Trade and Industry investigation team confirmed TelexFree laundered the estimated Rwf 7 billion to foreign companies in the US and Germany. These funds evaded taxation. The report accused the company of exploiting Rwandans to benefit its foreign owners.
The money laundered from Rwanda likely paid existing TelexFree investors in other parts of the world. The ban leaves the fate of local Rwandan affiliate investments unclear.
TelexFree uses i-Payout to transfer affiliate funds globally. The transfers to Germany raise questions about i-Payout's banking channels.
Prosecutors in Brazil already suspect TelexFree of money laundering and embezzlement. The US Securities and Exchange Commission also investigates the company. The SEC has not officially confirmed if its investigation covers i-Payout's business activities.
i-Payout hired Kevin Thompson last month to manage client compliance. Despite this, the payment processor's name still appears frequently in connection with questionable schemes.
Spinding offers one such example. This company provides affiliates positions in six "cycler" queues. Affiliates buy into these queues for $30 to $960, then wait for their positions to accrue balances of $1 to $32. These balances are payable up to ten times a day, funded by new position purchases from other Spinding affiliates. i-Payout facilitated these transactions for Spinding.