TelexFree trustee says alleged fraud swells to $3 billion

http://www.bostonglobe.com/business/2015/10/08/telexfree-trustee-says-alleged-fraud-swells-billion-million-participants/OwecZdsf9pyShOwunE8GhJ/story.html



TelexFree bankruptcy trustee Stephen Darr: “Some of the tales that you hear are really heartbreaking.”

TelexFree trustee says alleged fraud swells to $3 billion
By Beth Healy Globe Staff
October 08, 2015

The trustee in the TelexFree Inc. bankruptcy case said the scope of the alleged fraud is even wider than previously reported, with millions of customer accounts and more than $3 billion invested across virtually every country in the world.

In filings at federal court in Boston made late Wednesday, trustee Stephen B. Darr said at least 1 million participants opened 11 million accounts in two years through TelexFree’s Marlborough office. Darr also stated his finding that the operation was a “massive Ponzi/pyramid scheme,” a determination that will have an impact on who gets money back.

In a Ponzi scheme, new investors’ money is used to pay off earlier investors. Darr’s finding means that, as in the Bernard Madoff scandal, only people who can show they lost money will receive payments.

“Net winners,” or people who reaped profits but believed they were owed more, will not receive money, according to Darr’s filings.