Class-Action Lawsuit Filed Against TelexFree
4/16/2015
A class-action lawsuit has been filed against TelexFree Inc., consolidating the complaints of at least 780,000 alleged victims and accusing the company, its principals and top promoters of "knowingly, maliciously, and willfully" conspiring "to perpetrate...the TelexFree pyramid scheme with full awareness of its unfair, deceptive, and unlawful nature." The 200-page complaint names a number of service providers, including banks and accountants, alleging that they "were negligent or reckless in providing advice, directly participated in," or provided "essential substantial assistance" to TelexFree, despite knowing it was conducting an illegal pyramid scheme. Included in the list of service providers named in the lawsuit are Bank of America Corp. and PricewaterhouseCoopers.
The lawsuit alleges that Bank of America and PricewaterhouseCooper continued to do business with TelexFree after learning the company had been shut down in Brazil for conducting a pyramid scheme. According to the complaint, Bank of America questioned TelexFree about its business in spring of 2013 and "had echanges with TelexFree about terminating their relationship and discontinuing the service of their accounts, but never did."
The complaint also alleges that PricewaterhouseCoopers "negligently advised" TelexFree to prepare inaccurate 1099 tax forms to participants who had lost money with the company.
In 2014, Massachusetts Secretary of State William F. Galvin negotiated a $3.5 million settlement with another service provider, Fidelity Bank of Fitchburg, for allegedly allowing TelexFree to open accounts without thoroughly vetting the business.