MLM Pro Ken Stewart Perspective On The Question Of TelexFree Being A Pyramid Or Ponzi

Well, here’s the latest ILLEGAL pyramid scheme (According to the regulatory body in Brazil) to hit Africa! It’s called TelexFREE! (I’ve been warning people for several months. As predicted, it’s now under investigation in both Brazil and the U.S., the only 2 countries where it claimed to be operating. If you are in any other country and promoting it, or you have been approached to join, it is NOT legally operating in your country, not to mention the fact that the program is likely to be hit for being an illegal pyramid scheme (see links below to articles) and here’s a number of reasons why!

First, as someone who has extensive experience in regulatory compliance and has interacted with agencies such as the FTC, SEC, and others prior to my network marketing career, as well as having over 30 years of experience in the network marketing industry and considered one of the industry’s top leaders and experts (my partner and I have a combined more than 65 years of network marketing experience, had groups generate over $2 billion in sales, we’ve earned millions of dollars, been featured in various industry publications and websites, experts in pay plans, regulatory compliance (done consulting work with 2 of the industry’s top attorneys over the past 15 years-one a former prominent state Attorney General and the other Herbalife’s lead international attorney for more than 20 years), and international expansion), first, contrary to claims by some distributors that it has been “approved” by the law/government in the U.S., there is NO U.S. regulatory agency that “approves” any specific network marketing company and/or opportunity! (The landmark FTC case involving Amway legitimized the concept of network marketing, but not any specific company!)

Second, the Telex FREE program has so many regulatory red flags it should at the front of a Russian parade! I’m surprised it took regulators in Brazil and the U.S. this long to initiate an investigation, and will be extremely surprised if they do not shut this company down for being nothing more than an internet money game, an ILLEGAL pyramid scheme.

Programs that have a one time cost of entry and no minimum monthly performance requirements in order to earn income are automatically considered to be ILLEGAL pyramid schemes by most regulators, especially when combined with various other factors that are mentioned below!

Head In Sand

Regulators like to see some minimum monthly performance requirements that you have to meet in order to justify you receiving an income, especially on people you don’t know! (For example, to avoid regulatory problems and to ensure that they had a minimum 3 to 1 customer (non-business participant) to distributor ratio, which regulators like to see, telcom opportunities like EXCEL and ACN resorted to a 6 customer rule in order for you to earn commissions and bonuses…it appears you can make money in Telex FREE for doing nothing more than recruiting someone-at least that is what a number of distributors are promoting, that you can make money without having to sell anything or recruit anyone, which automatically makes it an illegal pyramid scheme in the eyes of regulators (So, even if the company has a customer acquisition rule, if distributors are running around making statements that you can make money without having to sell anything, etc., regulators will still consider the program to be an illegal pyramid scheme!)

Furthermore, regulators like the FTC like to see a 50/50 split regarding the revenue coming into the network marketing company from which the commissions and bonuses are paid-50% from distributors and 50% from non-business participants…with such a huge emphasis on recruiting, I seriously doubt Telex would meet this threshold, especially outside of Brazil!

Third, a number of distributors are “guaranteeing” income, which now automatically qualifies whatever they are selling to be a “security” in the eyes of the SEC-only banks and approved financial institutions/firms can guarantee an income. In order to sell a “security,” one must have a securities license. When either the company, and/or you, can’t provide one, you’re busted! (This is one way they hit Zeek Rewards for being an illegal pyramid scheme!)

In addition, a number of people are promoting the buying of multiple positions (up to 11-cost of $15,000+), which will catch the attention of regulators, and subject them to illegal pyramiding charges, especially in combination with all of the above points already made!

This is nothing more than a $290 to $1200 internet money game/illegal pyramid scheme hiding behind a voip service and advertising concept in order to give it the appearance of legitimacy..First, they’re not an approved vendor for VOIP if the current news reports are accurate…second, what they are selling for around $50 a month (voip service through your mobile phone, etc.)you can get for free or considerably less from other voip/sip sources online.

Furthermore, programs like this (does Ad Surf Daily ring a bell?) with virtually an identical approach (get paid to post ads, while others to read ads, etc.) have been tried and NEVER succeeded! In fact, almost all of the well known programs have been shut down by regulators!

The Telex FREE program is now hitting a number of countries in Africa, where they are illegally operating in almost all of the countries where the TelexFree program is being promoted! (They do not have licenses to market telecommunications services, no business license or registration, etc.). It is ILLEGAL for a network marketing company and/or its reps to do public meetings where they sign people up, sell products or services, take people’s money, and pay commissions without being in the process of and/or having done all the necessary registration and compliance work to legally operate in that country.

Unfortunately, because most Africans (and this includes government regulatory agencies) have little to no knowledge about regulatory compliance as it pertains to network marketing, what constitutes a legitimate network marketing opportunity versus an illegal money game or illegal pyramid scheme, programs like Rocket Cash Cycler and Telex Free are free to hoodwink people into parting with hundreds to thousands of dollars of their hard earned money.

Perhaps most concerning, when experts like me try to warn them, they either want to argue, or ignore what they’re told or shown. Even after showing someone today 2 of the articles that show Telex Free is under investigation for being an illegal pyramid scheme in both Brazil and the U.S., the person wanted to ignore reality (saying the media is just looking to stir up trouble-LOL!) and simply accused me of talking “bad” about Telex Free (how convenient! Can’t argue with the facts and the legal basis for my statements, so they play the “you’re just badmouthing my company” card.). As we say in the U.S., “you can lead a horse to water, but you can’t make it drink!”

My response was, “Jim Rohn, one of my mentors and coaches over 30 years ago, once said, ‘If someone is headed down the wrong road, they don’t need motivation! What they need is an education in order to turn them around.’ All I’m trying to do is educate you as to why they’re now under investigation and why they’re likely to face illegal pyramiding charges…why is that important? Because regulators are now prosecuting people like you for promoting such programs! Australia recently arrested, jailed, prosecuted, and fined 3 top earners in Australia that were in TVI Express, with the fine being $200,000 U.S.D!” The same occurred in Canada a few years back with some of the top distributors who had been promoting SkyBiz. When will people ever learn?

I then posed this question to him: “If you were headed down a road you’d never driven on before, and you were coming up on a curve and driving too fast, would you want me to 1) try to warn you that at the speed you’re driving your car, it will go off the curve and down a cliff and you’ll be killed, or 2) simply watch you drive by and do nothing, knowing you’re about to take a curve at too high a speed and drive off the cliff? The answer is “Duh” (#1) if you have half a brain! However, there are a lot of stupid people in the world, and some people just have to learn the hard way, which will apparently be the case with those involved with Telex FREE, just like it was with TVI Express, JSS Tripler/Just Been Paid, Ad Surf Daily, Zeek Rewards, and the numerous other types of internet oriented and advertising deals that have come and gone!

Anyone involved with Telex FREE is either new to the industry and/or knows nothing about regulatory compliance as it relates to a network marketing company and opportunity!

P.S. The fact that you or anyone else is making money does NOT make the program legal nor legitimate! People make money all the time in money games and illegal pyramid schemes (It’s part of the lure to attract new people!), and the fact that it has been around for awhile doesn’t make it legal either! Doesn’t the Bernie Madoff case ring a bell? He was able to perpetuate his $50 billion illegal Ponzi/pyramid scheme for several decades before he got caught! LOL!

One final note-Telex FREE has now lost ALL appeals regarding their lifting of an injunction against them (See one of the article links below)…here is what the Telex lawyer reportedly said: “an injunction against the injunction needed to be granted because should TelexFree spend a few more days being prohibited from signing up new investors, they would have no money to pay the old ones.” What! He just described his program as being an illegal pyramid scheme! LMAO!

By the way, using terms like “investors” and “investment” is one of the biggest no no’s you can make in regards to describing and/or promoting a network marketing because it now automatically qualifies whatever you are selling to be a “security” and thus you now fall under the jurisdiction of the SEC in the U.S. and their regulatory equivalents in other countries (as well as other regulatory agencies like the FTC, the U.S. Postal Service, state Attorneys Generals, local district attorney and their consumer protection divisions, etc.) and when you can’t provide a securities license, you’re in big trouble! The fact their attorney would allegedly make such a comment using the term “investor” tells me their attorneys don’t know anything about regulatory compliance, and that is cause for concern as well!

Note: Here’s several other huge no no’s in the network marketing industry-using phrases like “guaranteed” when describing income or “guaranteed income” as well as “you don’t have to sell anything or recruit anyone and you can still make money,” any one of which or all of which are guaranteed to get you into regulatory trouble, especially with the SEC (you are now selling a “security” in their eyes), and automatically classified as a “money game” or illegal pyramid scheme! (Does Ad Surf Daily, Just Been Paid, JSS Tripler, Zeek Rewards, just to name a few, ring a bell? They would if you had any experience or knowledge of the network marketing industry, especially in the area of regulatory compliance!)

They will likely also get hit with the fact that either they knew their reps were making such statements and did nothing to either educate their reps about the use of such words and phrases and/or enforce any policies they might have had in place in this regard, which is bad news, or that they should have known! All one had to do is go on sites like Facebook and others or do a Google search to see how the program was being promoted by their reps, so they obviously had no compliance department to oversee the actions of their reps! Either way, it’s spells trouble!

One final comment-the fact the company allegedly diverted $88 million after a judge froze their assets/blocked payments won’t go over too well with the judge as it means they circumvented the judge’s ruling! Talk about a great way to piss off a judge! If they aren’t hit with contempt of court charges, I’ll be shocked!

I’m just amazed at the number of people who have little to no knowledge about network marketing, comp plans, regulatory compliance, etc., who want to argue with real experts! They remind me of some of the people on the Titanic-iceberg warnings, yet full speed ahead, bands playing, passengers dancing and drinking, oblivious to what lie ahead, and then wham-next thing you know the ship has sunk, and if you weren’t lucky enough or smart enough to get off the ship in time, you ended up in the icy cold water and died of hypothermia.

It doesn’t take a genius to see what is probably coming their way, and not from just regulators in Brazil and the U.S., but a number of other countries as well. In case you didn’t know, the U.S., Canada, Australia, and a number of other countries have now banded together to fight internet scams and illegal pyramid schemes, and when a regulator in one country initiates an investigation, especially if the company in question is based either in one of those other countries or in an off shore haven, he /she automatically notifies their regulatory equivalent in the other countries, especially the country that is the home of the company in question if its part of this regulatory alliance, so the action in Brazil and the U.S. is likely just the tip of the iceberg, the opening volley!

By the way, here’s 3 articles which mention the illegal pyramiding investigation regarding TelexFree! (A word to the wise if you are promoting TelexFree-either stop and wait for the dust to settle, or run from this program as fast as you can, and I’d suggest requesting a refund as well! Good luck on that one! Anyone who continues to promote TelexFree in lieu of the current investigations as well as the analysis provided above is simply a fool, and subject to being arrested, prosecuted, fined, and jailed should the hammer fall on the company. Just ask a few of the top distributors in SkyBiz in Canada, or 3 of TVI Express’s top earners in Australia who were! (They were hit with fines of $200,000 U.S.D!)

http://www.patrickpretty.com/2013/07/03/report-telexfree-diverted-88-million-after-brazilian-judge-blocked-payments/ and http://www.patrickpretty.com/2013/08/14/report-telexfree-has-no-license-to-offer-voip-services-in-brazil-claim-reminiscent-of-u-s-government-assertion-against-adsurfdaily-ponzi-schemer-last-year/ and http://mlm-networkmarketingnews.blogspot.com/2013/07/telexfree-injunction-denied-bbom-denies.html

REPORT: TelexFree Diverted $88 Million After Brazilian Judge Blocked Payments

www.patrickpretty.com

that provided a guaranteed payout of at least $1,100 per week for a year to individuals who sent in $15,125 for the purchase of a ?contract.? TelexFree has been under investigation in Brazil for weeks.

Troy Dooly

Troy Dooly is recognized internationally as an influencer in the areas of personal branding, leadership development, marketing campaigns, organizational expansion, and corporate launch strategies. Dooly is a speaker, results coach, and radio host. He is a founding member, show host (Beachside CEO) and News Director of the Home Business Radio Network. He is a founding member, and currently serves on the Board of the Association of Network Marketing Professionals

More Posts - Website

Follow Me:
TwitterFacebookLinkedInPinterestGoogle PlusFlickrStumbleUponYouTubeRedditDelicious

Troy Dooly is recognized internationally as an influencer in the areas of personal branding, leadership development, marketing campaigns, organizational expansion, and corporate launch strategies. Dooly is a speaker, results coach, and radio host. He is a founding member, show host (Beachside CEO) and News Director of the Home Business Radio Network. He is a founding member, and currently serves on the Board of the Association of Network Marketing Professionals