After debate over the legitimacy of the now confirmed ponzi scheme, TelexFree, ended last month, law enforcement agencies and courts around the world have been busy investigating and, in some cases, prosecuting suspects in the multi-billion multinational internet fraud scheme.
By the time Rwanda issued a ban on its operations in March 2014, the company, registered locally in the country, had reportedly laundered over USD 10 million.
In Uganda, over 5,000 people are estimated to have signed up for the program. But that represents only a meagre percentage of the people that have lost their money in online schemes this year alone.
Local reports indicate that over 7 billion Uganda Shillings (USD 3million) has been lost in the process.
According to Police, one, Ronald Maramuzi in 2012 started up different websites which were to sell memberships that promised annual returns of 200 per cent or more for those who promoted the companies by recruiting new members and placing the companies advertisements on free internet ad sites.
He registered companies that ran high-yield investment programs (HYIP), including Tesco Trader, Adfast Inc, Telex Free, Bank Electro, United Hype League and Massive Ads, but all opened under different names Morgan Mugisha, Bob Mugisha, Muramuzi Ronald Kato and Kato Ronald.
A HYIP is a type of Ponzi scheme, an investment scam that promises unsustainably high return on investment by paying previous investors with the money invested by new investors. Most of these scams work from anonymous offshore bases which make them hard to track down.
Meanwhile in the US, TelexFree Inc. co-owner James M. Merrill will remain in custody pending trial, a federal judge in Worcester ordered on Tuesday.
According to the US attorney’s office, Magistrate Judge David Hennessy made the ruling in the $1 billion fraud case. Marlborough-based TelexFree and its principals have been charged with fraud in separate civil and criminal actions.
Merrill’s partner, Carlos Wanzeler, has fled to his native Brazil and is considered a fugitive by US authorities. Wanzeler’s wife, Katia, tried to leave the country last week but was arrested in New York.
TelexFree sought bankruptcy protection in April, days before state and federal securities regulators filed civil fraud charges against the company for allegedly running a global pyramid scheme.
Telexfree’s Brazilian operations were regarded as one of the largest financial frauds in Brazil’s history, according to Brazil’s Ministry of Justice and the Federal Public Ministry. The number of investors (labelled as “promoters” by Telexfree) has not yet been determined; by the end of August 2013, just after companies’ suspension, Company Director Carlos Roberto Costa said that the company had 1,049,619 active promoters in Brazil.
In April 2014, an investigation in the United States confirmed that Telexfree worked under a Ponzi scheme and handled more than $1 billion worldwide. The conclusion was made by SEC-MA, the agency that regulates the financial transactions in the company’s home state of Massachusetts.
Just like Muramuzi in Uganda, the Brazilian founders are likely to server considerable prison sentences.