| BOSTON, April 15
BOSTON, April 15 Massachusetts' top securities
regulator on Tuesday charged a company that marketed online
telephone services with running a $1 billion pyramid scheme that
targeted minorities, including Brazilian-Americans.
William Galvin, Massachusetts' secretary of state, said that
TelexFREE Inc offered fraudulent and unregistered securities in
the state while making false promises to potential participants
that they could get rich quickly.
"Pyramid schemes are nothing new, nor are schemes that
target a specific group, but modern communications gives them
instant world-wide scope," Galvin said in a statement.
Participants in the scheme could pay TelexFREE $289 for one
advertising kit or $1,375 for five kits. In return for posting
daily prewritten advertisements to predetermined websites, the
company promised yearly returns as high as 250 percent, Galvin
He said the company raised over $1 billion worldwide.
Pyramid schemes pay participants more to recruit new members
into the scheme than for selling the product.
The company used "extravaganzas complete with a rock concert
atmosphere and wild cheering" to recruit new participants and
its presentations often included "pictures of cash and luxury
property," Galvin said in his complaint against the company.
The company filed for bankruptcy protection in Nevada on
Monday. Its website is under construction, and the company could
not be reached by telephone.
"Through the offer or sale of unregistered securities,
TelexFREE has caused and continues to cause great harm to
unsophisticated minority populations enticed by the false
pretense of getting rich quick," the complaint said.
(Reporting by Svea Herbst-Bayliss; Editing by Ken Wills)