TelexFREE second class lawsuit claims fraud, $300 million damages

By Kali Hays

New York, May 16 - A second class action lawsuit has been filed against TelexFREE, LLC and its subsidiaries, TelexFREE, Inc. and TelexFREE Financial, Inc., seeking $300 million in damages and accusing the company of fraud, misrepresentation and civil conspiracy, according to a complaint filed Thursday with the U.S. Bankruptcy court for the District of Massachusetts.

The class is represented by Anthony Cellucci, Jamilly Lake and Gerivaldo Pacheco, all of whom were "promoters" of TelexFREE's voice over internet (VoIP) technology and promised return investments of 200%.

The lawsuit claims that TelexFREE "unlawfully, willfully and knowingly" used "manipulative and deceptive devices and contrivances" in the course of business and defrauded members of the class out of $300 million of investment funds "in just a few short years," according to the complaint.

The initial class action suit was filed against the company on May 3 and similarly accuses the company, while seeking $5 million in damages.

As previously reported, the Securities and Exchange Commission filed a complaint against the company on April 15 alleging that while TelexFREE claims to run a "multilevel marketing company" selling telephone service-based VoIP, it actually is operating a $1 billion pyramid scheme targeted at Brazilian and Dominican immigrants.

The company sold "memberships" promising annual returns of 200% or more for those who promote TelexFREE by recruiting new paying members and placing company ads on websites that did not charge advertisers, the SEC complaint said.

Any payments given to promoters came directly from new memberships, not returns on company product.

As a result of the SEC's investigation, all company assets were frozen along with those of eight principles and directors of the company.

In addition to the $300 million in damages, the class is asking for interest on the amount, payment of legal fees and demanded a trial by jury outside of Bankruptcy Court.

TelexFREE, a private, Marlborough, Mass.-based telecommunications and multi-level marketing company filed for bankruptcy April 14. The Chapter 11 case number is 14-12524.

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