Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comTelexFREE files for bankruptcy
Author: Joel R. Glucksman|May 1, 2014
TelexFREE files for bankruptcy
TelexFREE LLC, an international telecommunications and multi-level marketing company headquartered in Marlborough, Mass., filed for protection under Chapter 11 of the bankruptcy law on April 14, according to Wicked Local Winchester. The company recently had its operations shut down in Brazil, and is under investigation by the Massachusetts Secretary of State William Galvin.
Brazilian authorities have alleged that the company appears to be a pyramid scheme. A representative for Secretary Galvin has said that the office is looking into TelexFREE because of its similarity to another multi-level marketing company that the state shut down in November.
The company announced that it has sufficient cash on hand to support its business throughout the reorganization process. TelexFREE said that it has conducted a review of its operations in connection with the Chapter 11 filing, and had determined that an adjustment is needed to capitalize on the demand for its voice over Internet product, rationalize its promotional expenses and ensure that its sales programs are compliant with legal requirements.
“We anticipate that our global operations will continue to provide our customers with the high-quality products and services they have come to expect,” said TelexFREE’s interim Chief Executive Officer Stuart MacMillan. “We are taking this major step because we continue to believe in our business, our products and the enthusiasm of our world-class team. We believe that this restructuring plan, which will include significant enhancements to our governance practices and internal controls, will help us to build a stronger and more sustainable financial and operational foundation for the future.”
In response to the company’s filing, federal agents from the FBI and Homeland Security raided its Marlborough headquarters this week, according to the Boston Globe. Securities regulators in Massachusetts filed a civil lawsuit against TelexFREE the next day, accusing it of a $90 million fraud in the Commonwealth and $1 billion worldwide.
TelexFREE files for bankruptcy
Author: Joel R. Glucksman
TelexFREE LLC, an international telecommunications and multi-level marketing company headquartered in Marlborough, Mass., filed for protection under Chapter 11 of the bankruptcy law on April 14, according to Wicked Local Winchester. The company recently had its operations shut down in Brazil, and is under investigation by the Massachusetts Secretary of State William Galvin.
Brazilian authorities have alleged that the company appears to be a pyramid scheme. A representative for Secretary Galvin has said that the office is looking into TelexFREE because of its similarity to another multi-level marketing company that the state shut down in November.
The company announced that it has sufficient cash on hand to support its business throughout the reorganization process. TelexFREE said that it has conducted a review of its operations in connection with the Chapter 11 filing, and had determined that an adjustment is needed to capitalize on the demand for its voice over Internet product, rationalize its promotional expenses and ensure that its sales programs are compliant with legal requirements.
“We anticipate that our global operations will continue to provide our customers with the high-quality products and services they have come to expect,” said TelexFREE’s interim Chief Executive Officer Stuart MacMillan. “We are taking this major step because we continue to believe in our business, our products and the enthusiasm of our world-class team. We believe that this restructuring plan, which will include significant enhancements to our governance practices and internal controls, will help us to build a stronger and more sustainable financial and operational foundation for the future.”
In response to the company’s filing, federal agents from the FBI and Homeland Security raided its Marlborough headquarters this week, according to the Boston Globe. Securities regulators in Massachusetts filed a civil lawsuit against TelexFREE the next day, accusing it of a $90 million fraud in the Commonwealth and $1 billion worldwide.
