Just how much of MLM is smoke and mirrors (and illusions of wealth)?

Recently, an article on BehindMLM caught my attention. The title was "Wakaya Perfection Field Leader sentenced to prison for fraud".

It's not the fraud itself though, but the circumstances that caught my attention.

According to the article, Andre Vaughn *had* an illustrious MLM career MLM.

In an article in Networking Times, Vaughn claimed to have found MLM on "February 24, 2005".

In 2012 Youngevity brochure, Vaughn was named as one of the "million dollar earners"

In 2014, he was cited as "Senior Vice Chairman," and "Marketing Director" of Youngevity.

Vaughn jumped ship to Wakaya Perfection in late 2015 when the existing leader left the company with several top "officers". This resulted in Youngevity and Wakaya suing and countersuing each other.

He was cited as "Founding Member" and "Gold Member Billionaire's Inner Circle" in Wakaya. His current rank is believed to be "Blue Diamond Ambassador" (among the highest") which I presume, comes with a hefty paycheck.

Then I learned that Vaughn pled guilty to bankruptcy fraud... Fraudulently declaring bankruptcy together and separately with his wife Monique (with twins) in

• April 2005
• June 2012
• July 2013
• April 2015. 

Now let's put that in perspective by lining up the events, just those we can document. And that doesn't even include any of his Wakaya titles.

• Joined MLM in February 2005
• Declared bankruptcy in April 2005
• Joined Youngevity sometime prior to 2012 (probably 2009?)
• Million dollar earner in Yougevity in 2012
• Declared bankruptcy in June 2012
• Declared bankruptcy in July 2013
• Senior Vice Chairman, Marketing Directory of Youngevity in 2014
• Declared bankruptcy in April 2015

Either this guy declares bankruptcy at a whim to cheat his creditors, or MLM doesn't pay NEARLY enough and his "million earner" status was an illusion. The truth is probably somewhere in between.

In fact, even Vaughn's accomplishments at Youngevity is in doubt. In the lawsuit between Youngevity and Wakaya, Youngevity alleged that then-president Andreoli "force qualified" Vaughn and his wife (i.e. they got the rank WITHOUT meeting the required goals) resulting in them getting paid more without actually bringing in more sales.

Either MLM attracts this sort of people... or encourages this sort of behavior.

NEWS UPDATE: TelexFree may be the widest Ponzi scheme ever, surpassing ZeekRewards

Previously the Ponzi scheme with the widest reach is believed to be Zeek Rewards at 1 million victims and almost nine hundred million dollars. It was shut down in 2012 by SEC and other US agencies.

The bankruptcy trustee in charge of shutting down TelexFree after it tried to declare bankruptcy revealed that TelexFree fraud may be even bigger... with possibly up to 2.1 million victims and OVER a billion dollars.

There are 60000 victims in SOUTH AFRICA... the opposite side of the globe.

Boston Globe reported that some unscrupulous lawyers are encouraging victims to flood Darr's office with paper claims (i.e. physical documents).  He is NOT, repeat NOT taking paper claims because it cost too much to process. Soon claimants will be able to go to a website (much like Zeek Rewards Receivership) to file claims, and they will process the claims online.

Read the full article at  http://www.bostonglobe.com/business/2014/12/16/telexfree-trustee-stephen-darr-may-have-toughest-job-boston/Wkk5JzcPtjfyar6c9QD1sI/story.html#

News Update 07-JUN-2014: TelexFree trustee appointed; TelexFree Faith Sloan know NOTHING about fraud, SEC disagrees; Lyoness not a pyramid scheme in Norway now

Remember folks, when you read news, even ones provided here, you should check the links I provided to make sure I was representing the new properly, and you should do the same for ALL the "news" you come across, unless you encounter news such as those from major newspapers, which has readers to account for and has a reputation of telling the truth, rather than what you want to hear. Stop reading crap meme and spreading them.


Stephen B. Darr selected as US trustee to oversee TelexFree bankruptcy

As directed by the judge Hoffman, US trustees has appointed Stephen B. Darr of Merisow Financial Consulting as trustee to takeover the TelexFree bankruptcy.

Here's the actual court order making the appointment:  (Thanks to Attorney Tim Durken for the lead)

http://www.scribd.com/doc/228343084/TelexFree-Certificate-of-Appointment-of-Chapter-11-Trustee

What exactly does a trustee do? Here's Cornell Law School's link to actual law on that:

http://www.law.cornell.edu/uscode/text/11/1106

You can find a short profile on Mr. Darr on the Merisow website:

http://www.mesirowfinancial.com/mfc/leadership/darr_s.jsp

BREAKING NEWS: TelexFree Bankruptcy Will Be Moved to Massachussetts

It was just announced (about 30 some minutes ago) Judge Landis of Bankruptcy Court in Las Vegas Nevada has decided to move the case to Massachusetts.

http://www.ponzitracker.com/main/2014/5/6/court-suspends-telexfree-bankruptcy-grants-motion-to-transfe.html

Judge cited many reasons, essentially concluding that the ONLY thing tying TelexFree to Nevada is a mailbox and a piece of paper filed with Nevada. EVERYTHING that had something to do with the company, such as HQ, staff, equipment, assets, and so on, are in or near Massachusetts. Even 10 of the top 30 creditors are in Massachusetts.

Judge did not rule on motions such as which parts of temporary restraining order conflicts with the automatic stay (part of bankruptcy) or the US Trustee's request to have a special trustee placed to oversee the bankruptcy rather than TelexFree personnel (such as Runge and MacMillan).

Stay tuned to MLMSkeptic blog, BehindMLM, PonziTracker, and/or PatrickPretty websites for more updates as they become available.

UPDATE: News now confirmed by Boston Globe

http://www.bostonglobe.com/business/2014/05/06/las-vegas-bankruptcy-judge-will-send-telexfree-case-back-massachusetts/KAo3EqqIOmcfFYGGnjioNP/story.html

TelexFree News Update 5/5/2014: Dominican Fugitive, Class Action Lawsuit

The trial will continue in Las Vegas, but there are other developments.

Dominican Republic Developments

TelexFree top promoter in Dominican Republic Carlos Manuel Vanterpool Severino has apparently gone into hiding, and is considered a fugitive (from the law), according to DR media reports. At least 5 different raids were performed last week by authorities, and various items such as cash, 2 weapons (shotgun and pistol), plus various computers and phones (smartphones and tablets?) were seized.

http://pgr.gob.do/Portal/Contents/Articulos/Noticias/20140504-Procuraduria-asegura-continuaran-allanamientos-torno-caso-TelexFree.ashx (in Spanish)


Class Action Suit Launched Against TelexFree, top promoters and officers, lawyer, banks... 

Class action lawsuit has been filed against TelexFree entities, officers, top promoters, Gerald Nehra the lawyer, and the banks. The 73 page document alleged that TelexFree officers conspirated with the top promoters along with the lawyer Gerald Nehra to violate security laws, promote fraud, and much much more. And the banks did nothing to stop the fraud.

http://www.kccllc.net/telexfree/document/1412524140505000000000004

http://www.metrowestdailynews.com/article/20140502/NEWS/140509026/1994/NEWS

TelexFree News Update 5/2/2014: New CEO knows nothing, most procedural things done, no big news

May 2nd is the big court date for TelexFree and Jordan "Ponzitracker" Maglich was live-tweeting about the trial, and not too much happened. Before giving you a summary, I would like to make some comments.

1) Nothing Important Happened. Really. 

Any one who tell you otherwise, like "court exonerates TelexFree", are LIARS.

There was ONE document, that says something will be decided today, but today's session will be continued Monday. It has NOT concluded. So any one who was talking about "good news" are LIARS. There are NO SIGNIFICANT NEWS. Today is just some testimony, and decisions on what can be admitted as evidence, and what cannot be.

2) Unauthorized and plagiarized "live tweet" of trial

Any one "live tweeting", unless they are actually IN the courtroom, and they are probably lying, are simply copying Jordan "Ponzitracker" Maglich's coverage (and Oz's authorized copy on BehindMLM).

Here's the original: http://www.ponzitracker.com/main/2014/5/2/live-blogging-the-telexfree-bankruptcy-hearing.html

There are many alleged coverage on Youtube, mostly of stupid, unattributed (and unauthorized) translations and copies of the real thing, and often the information are outright WRONG. Some even claimed that the bankruptcy was already approved (it haven't even started).  THOSE ARE LIARS. THEY POST CRAP LIKE THIS:

Actual fake news found online even before the trial
coverage ended today, 2-MAY-2014

Accept no substitutes. Ponzitracker will be covering the continuation on Monday. If you wish to donate a few dollars to pay for his special lawyers-only subscription ($30 per hour!) to the trial, please do so at his website.

Now, a quick summary of the trial thus far:

TelexFree News Update 4/25/2014: millions deposited with lawyers in only 2 months

A series of disclosures by the lawyers involved with TelexFree yielded many interesting tidbits

1) According to disclosure by Greenberg Traurig, they were retained by TelexFree in February 2014, when Massachussetts started asking questions. Then on April 7th, when TelexFree started contemplating bankruptcy, they signed a new contract.

See http://www.kccllc.net/telexfree/document/1412524140425000000000008  paragraph 4 and 5

2) Greenberg Traurig has been paid over 3.72 MILLION dollars so far, but only spent about 557 thousand as of 4/24/14.

See http://www.kccllc.net/telexfree/document/1412524140425000000000008 paragraph 6

3) To handle bankruptcy in Nevada, another lawfirm, Gordon Silver, was retained on April 13th. That's the same day the bankruptcy petition was entered in Nevada. They were paid 750K, of which they spent 55K as of 4/24/14

See http://www.kccllc.net/telexfree/document/1412524140425000000000003 paragraph 4

4) Then Gordon Silver hired Kurtzman Carson  (i.e. KCCLLC), who were paid 350K, and spent very little of it thus far.

TelexFree News Update, April 24, 2014: Claim process starts (DO NOT FILE YET!), more investigation in Dominican Republic, and more legal motions

A flurry of news for past 24 hours, but all of them small. Here's the summary:

TelexFree Bankruptcy will Continue in Nevada for Now, Claim Deadline Set

Bankruptcy judge in Nevada has allowed the bankruptcy proceedings to continue for now (on an interim basis), with another court date for May 2nd among the parties such as TelexFree, SEC, and US Trustees. KCC has been appointed interim claims and noticing agent to handle paperwork. 

As a result of this appointment, court also has set tentative dates, including a "341 Meeting" (named for the bankruptcy law section) for May 22nd, and claim deadline of August 20.  The debtors will be present and if you are a creditor, there may be an opportunity to question the principles of TelexFree. 

The "341 Meeting" will take place May 22, 2014 at 3:00 P.M. in the Jury Assembly Room of the Lloyd D. George U.S. Courthouse in Las Vegas, Nevada

Any and all claims *must* be filed with the claim agent. Absolutely DO NOT file the claim with the court itself.  Jordan "Ponzitracker" Maglich will have a guide on how to fill out the claim and where to send it and it will be linked from here when it is published. You can wait a few days!

See http://www.ponzitracker.com/main/2014/4/24/claim-deadline-set-for-victims-in-telexfree-bankruptcy.html


ANALYSIS: Do not file any claims yet. Wait until after May 2nd at least. You don't even know if the claims will be staying in Nevada just yet. By then a guide to fill out the claim will be published.


TelexFree and SEC file a flurry of motions and briefs

TelexFree is arguing that bankruptcy would trump some parts of the TRO. This will be decided in Nevada court on May 2nd.   (SEC asked for April 30th, but judge took TelexFree's side and gave both May 2nd).

SEC's arguing that the case belongs in Massachussetts, where the creditors and the principal all reside. This will be heard on May 2nd.

The individual defenders, such as Labriola, Crosby, and so on have entered their own motions to fight the TRO. On Friday, April 25th, court in Massachussetts will decide whether the TRO will be made permanent.

You can read a full list of motions and order on BehindMLM.com

See: http://behindmlm.com/companies/telexfree/telexfree-court-status-24th-april-2014

ANALYSIS: May 2nd seem to be the big day. Wait until then.

Dominican Republic Authorities Expand TelexFree investigation

Dominican authorities, including anti-money laundering unit, National Prosecutor, and Superintendency of Securities, will coordinate efforts to trace the money of victims in Dominican Republic, which is believed to be tens of millions of pesos. They promised to track down the top promoters and find out where the money went, and if it did indeed left the country, will seek US help to retrieve the money. 

See http://www.dominicantoday.com/dr/local/2014/4/22/51221/Dominican-agencies-probe-TelexFree-ponzi-scheme

BREAKING NEWS: SEC appears in TelexFree Nevada bankruptcy court, wants whole thing moved to Massachussetts

English: The Seal of the
United States Federal Bureau of Investigation.
(Photo credit: Wikipedia)

SEC has formally filed a motion to join the Nevada TelexFree bankruptcy hearing, and to move the Nevada Bankruptcy hearings to Massachussetts, according to court documents filed, as spotted by PatrickPretty.com. The filing revealed that there are two separate probes, one by Massachussetts secretary of state, securities division, and one by US Attorney's office (department of Justice), that involved FBI, HSI, ICE, and possibly other agents. It notes that while the company is registered in Nevada, it really exists only in Massachusetts.  Asset freeze obtained by SEC started April 16th, 2014.

The SEC motion can be viewed here, courtesy of KCCLLC

Breaking TelexFree News: TelexFree wants a 6 week delay, while DOJ wants bankruptcy trustee to take over ASAP

Here's your TelexFree update for 23-APR-2014.

TelexFree wants 6-week delay in bankruptcy

TelexFree, through KCC, has filed a motion for 6 week delay on 22-APR-2014, claiming that the SEC/FBI/ICE/local law/ who knows what else raid took all their documents and they can't fill out the rest of bankruptcy paperwork. Bankruptcy court originally gave them 2 weeks, though normally all such information should have been included. For the bankruptcy to be even considered.

According to Jordan "Ponzitracker" Maglich,

Federal Bankruptcy Rule 1007 sets forth a list of the required documents and schedules to be filed in connection with initiation of a Chapter 7, 9, 11, or 13 bankruptcy.  In addition to a bankruptcy petition, a debtor is also required to file:

• schedules of assets and liabilities;
• a schedule of current income and expenditures;
• a schedule of executory contracts and unexpired leases; and 
• a statement of financial affairs.

In addition, other required schedules include lists of creditors holding secured and unsecured claims, personal and real property holdings, and executory contracts and expired leases.
In the initial filings made by TelexFree, none of these required schedules were included. 

http://www.ponzitracker.com/main/2014/4/22/telexfree-seeks-six-week-extension-to-file-financial-informa.html


US Department of Justice wants company placed under bankruptcy trusteeship IMMEDIATELY

US Trustees, which is the side representing the public, has filed a counter motion also on 22-APR-2014, that seeks to have TelexFree immediately transferred to the control of a bankruptcy trustee (much like Bernie Madoff's trustee Irving H. Picard, but not completely the same).

Normally bankruptcy can be handled by the people declaring the bankruptcy. US Trustees has plead with the judge to appoint a bankruptcy trustee due to evidence of fraud already documented by Mass Securities Division and the SEC, and the newly hired officers such as acting CEO and CRA cannot be trusted as they have been hired by those who are suspected of fraud.

You can read the document here:

http://www.kccllc.net/telexfree/document/1412524140423000000000001

Please note both are merely INTENT, and has NOT BEEN APPROVE BY THE COURT!

BREAKING NEWS: TelexFree Declares Bankruptcy, then was REJECTED

Bankrupt (Photo credit: LendingMemo)

Yes, you heard right: TelexFree (US) tried to declare Chapter 11 bankruptcy and reorganization.

Then was rejected for filing an incomplete application.

On Sunday, 13-APR-2014, Press Release started appearing all of the US through PRNewsWire, which linked to this document :

http://www.kccllc.net/telexfree/document/1412524140413000000000001

Appears to be official, and contains a list of creditors owned money to.

According to some comments, (unverified) the top creditors to the bankrupt TelexFree are Carlos Costa's wife and nephew (1.34 mil and 0.96 mil USD respectively). Carlos Costas is head of TelexFree in Brazil.

Document only lists the top 30 creditors, there are obviously much much more.