TelexFREE Scam - FBI Raid and Shutdown
I have seen many absurd statements posted by companies trying to mitigate the damage to their image when they crash and burn.
None have come close to the ridiculousness of TelexFREE's statement today in the wake of an SEC investigation, an FBI and Homeland Security Raid, and their CFO being detained trying to leave the building with 38M ( yes, 38 Million - capital M ) in unchashed checks from their headquarters in Marlborough, MA.
Their "statement" today, let's call it creative writing, makes the following circular logic statements in the first paragraph:
"Earlier this week, TelexFREE filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. The Chapter 11 filing is intended to protect TelexFREE assets, quantify legitimate claims, restructure our operations, and establish a firm foundation for the future. The Chapter 11 filing further demonstrates our belief in the strength of our core business and products and the enthusiasm and dedication of our independent sales associates as well as our determination to protect the assets of the Company and maximize the recoveries for all constituents."
Let's parse this out.
TelexFREE filed for 'voluntary' bankruptcy just a day or two before they were to be raided. Sounds like someone read the writing on the wall.
A bankruptcy doesn't "protect" your assets unless you are insolvent. In other words, unless your business has already tanked, and you can't pay your reps, vendors, rent, whatever, you can't legitimately file. You can't file bankruptcy so you can keep your money in the bank while you duke it out with the SEC, and you most definitely can't have your CFO try to wander off with 38 million in checks.
If you have 38 MILLION DOLLARS in uncashed checks, how can you possibly be insolvent? What's your monthly overhead, if 38 Million won't instantly pay off all your rent and bills.
Unless you're a ponzi scheme and you owe far more that to ponzi victims who have already put up cash and are expecting a return.
In a legitimate bankrupcty, a court appointed trustee takes control of all the assets and disperses them based on priority to qualified debtors. This doesn't mean TelexFREE gets to keep doing business and/or pay reps what their comp plan promises.
Their statement goes on further to say:
"We remain confident in the Company's long-term business prospects and the value of the services we provide to customers. Unfortunately, the precipitous and unnecessary actions taken by the state and federal agencies have temporarily suspended the VoIP services TelexFREE customers rely on. The Company disputes the material allegations made by these agencies and regrets that their actions impede our ability to continue to serve our customers, restructure our operations, and thereby emerge as a stronger and more competitive company.
TelexFREE believes the Chapter 11 process is the most effective vehicle available to address the concerns of all constituencies, including the purported concerns of the state and federal agencies. We intend to address the pending legal proceedings against it through the Court process. "
Confident in the business's long term prospects? You have 38 million in checks waiting to be depositied, but you file bankruptcy to 'protect your assets'.
Here's your prospects: Your US based CEO and CFO are going to jail. For a long time.
Those who invested in this scheme may have some chance of seeing some small fractional return, only because they caught the CFO red-handed before he got out the door with the 38 million. Any qualified CFO would know that hiding assets is a serious federal crime in a bankruptcy case. So either he was not a qualified CFO, or, he is and caught caught making a major criminal mistake.
This company was already shut down in Brazil and I truly have compassion for anyone preyed upon in the US in this scheme.
Even Zeekler's crash and burn doesn't compare to the doesn't compare to the scale and scope of the TelexFREE shutdown.
