$20 Million in TelexFree Ponzi Scheme Money Found in Mattress
The TelexFree case—the alleged pyramid scheme that prosecutors say targeted Massachusetts’ immigrant communities and is the largest such scam ever perpetrated—is back in the news today. This time, it’s because police in Westborough found a jaw-dropping $20 million wad of cash inside a mattress, which they say is money tied to the scheme that had been bound for Brazil.
According to U.S. Attorney Carmen Ortiz’s office, police found the money stuffed inside a boxspring Wednesday as part of a money laundering investigation.
Cleber Rene Rizerio Rocha, 28, has been charged with a conspiracy charge for his role in what prosecutors say was a plan to transfer millions of dollars to Hong Kong, then route it to Brazil for TelexFree co-founder Carlos Wanzeler, who fled there in 2014.
Prosecutors say a cooperating witness—recruited by Wanzeler to smuggle money out of the country—led them to Rocha, who gave the witness a suitcase filled with $2.2 million cash at an unnamed restaurant in Hudson. Police then followed Rocha to a Westborough apartment, arrested him, and then later discovered the stash.
Rocha, who Ortiz’s office says flew here from Brazil to complete the transaction, now faces up to 20 years in prison, but would likely serve much less time than that, according to a release.
As a refresher, the TelexFree scheme began with a long-distance phone plan company, which set up shop in Marlborough, that pitched a tantalizing opportunity to its alleged victims: it asked people to invest hundreds, or even thousands, of dollars, and invite friends and family to do the same, with promises that they would see big returns on their money via payouts for posting ads. Locally, the scheme managed to infiltrate tight-knit Massachusetts immigrant communities—even faith leaders and radio hosts urged community members to take part.
But those investors were misled, prosecutors say, and many were not able to collect the returns on their investments they were promised. It was a classic Ponzi scheme, officials say, which by the end was a multibillion-dollar global phenomenon that impacted as many as two million people around the world.
James Merrill, TelexFree’s chief executive, pleaded guilty to nine counts of fraud in October. He is due for sentencing in February. Despite being an evangelist for the company at raucous rallies, Merrill insists that he didn’t fully understand what the company had become, and the scale of the fraud taking place.
As the case continued to play out, there had been millions of dollars of TelexFree money secreted away in Massachusetts, Ortiz’s office says—in a mattress.
Wanzeler, the co-founder for whom the cash seized this week was allegedly being laundered, fled to Brazil after a raid at TelexFree’s Marlborough headquarters in 2014, and U.S. officials have not been able to compel the government there to send him back.