U.S. man to plead guilty in billion-dollar pyramid scheme: prosecutor

October 21, 2016 11:56 AM EDT

Get instant alerts when news breaks on your stocks. Claim your 2-week free trial to StreetInsider Premium here.

BOSTON (Reuters) - A Massachusetts man has agreed to plead guilty to running a pyramid scheme that defrauded victims, including many Brazilian-Americans, of more than $1 billion, federal prosecutors in Boston said on Friday.

James Merrill, who had served as president of TelexFree, a company that purported to provide online telephone services but prosecutors contend actually operated as a pyramid scheme, has agreed to plead guilty to charges in a hearing on Monday, Oct. 24, court records show.

He had been set to stand trial next month on charges including conspiracy and wire fraud for orchestrating the scheme, which invited victims to pay up to $1,375 for kits they would use to post online advertisements promoting the company's phone service.

TelexFree had claimed participants would earn yearly returns of as much as 250 percent of their investment, before federal and state officials shut the company down in 2014. The company, which had primarily targeted immigrant communities including Brazilian-Americans, subsequently filed for bankruptcy.

It had previously operated in Brazil, where the government shut it down in 2013.

It had generated less than 1 percent of its revenue by actually providing phone services, prosecutors said.

An attorney for Merrill did not immediately respond to a request for comment.

(Reporting by Scott Malone; Editing by Matthew Lewis)



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In






Related Categories

Reuters

Related Entities

Bankruptcy

Add Your Comment