More than 14,000 Massachusetts residents have received about $2.9 million from the first distribution from a fund set up by the state’s Securities Division’s settlement with a Fitchburg, Massachusetts bank that held bank accounts for TelexFREE, an illegal pyramid scheme that targeted the Brazilian community in the state, Secretary of the Commonwealth William Galvin announced Friday. Each investor will receive $205.52.
In April 2014, the Massachusetts Securities Division charged TelexFREE with running a $1.1 billion Ponzi investment scheme. In July 2014, TelexFREE principals James Merrill and Carlos Wanzeler were indicted on federal charges of wire fraud and conspiracy.
“While this money does not make the TelexFREE victims whole,” Galvin said in a statement, “the distribution does provide the first real monetary relief received by Massachusetts victims of this international pyramid scheme. I am very pleased that my office was able to get some money back for these victims.”
The Massachusetts Securities Division entered into a consent order with Fidelity Cooperative Bank of Fitchburg in September 2014, which is not related to Fidelity Investments.
The division alleged that the bank failed to detect in a reasonable time period suspicious activity in the TelexFREE accounts. The bank’s president John Merrill is the brother of James Merrill, one of two TelexFREE principals.
The division stated at the time of the settlement that the bank cooperated with the Securities division’s investigation. The SEC said that the scheme also targeted Dominicans.